Martinez Tar and Gravel Ltd. operates a road construction business. In its first year of operations, the company won a contract to build a road for the municipality of Cochrane West. It is estimated that the project will be completed over a three-year period starting in June 2020. Martinez uses the percentage-of-completion method of recognizing revenue on its long-term construction contracts. For tax purposes, and in order to postpone the tax on such revenue for as long as possible, Martinez uses the completed- contract method allowed by the CRA. For the second year of operations, Martinez made progress on the construction of the road for the municipality. The account balances at December 31, 2020 and 2021, for the construction project and the accounting and tax balances of accounts related to the equipment used for construction follow: Accounts Receivable Asset/Liability (net of billings to date of $802,000 and $400,000) Revenue from Long-Term Contracts Construction Expenses Equipment Accumulated Depreciation-Equipment Undepreciated Capital Cost 2021 $115,000 127,000 429,000 417,000 1,100,000 456,000 613,000 2020 $320,000 100,000 500,000 350,000 1,100,000 170,000 980,000 Martinez's tax rate is 25% for 2020 and subsequent years. Income before income tax for the year ended December 31, 2020, was $195,000 and for December 31, 2021, was $121,000. Calculate the deferred tax asset or liability balances at December 31, 2021. Deferred tax LA eTextbook and Media List of Accounts Calculate taxable income and income tax payable for 2021. Taxable income $ $ Income tax payable $ eTextbook and Media List of Accounts Prepare a comparative income statement for 2020 and 2021, beginning with the line Income before income tax." Martinez Tar and Gravel Ltd. Comparative Income Statement (Partial) 2021 2020 $ $ $ $ Provide the statement of financial position presentation for any resulting deferred tax balance sheet accounts at December 31, 2020 and 2021. Martinez Tar and Gravel Ltd. Statement of Financial Position (Partial) 2021 2020 $ eTextbook and Media List of Accounts Provide the comparative balance sheet presentation for any resulting deferred tax balance sheet accounts at December 31, 2020 and 2021, assuming Martinez follows ASPE. Martinez Tar and Gravel Ltd. Comparative Balance Sheet (Partial) 2021 2020 Martinez Tar and Gravel Ltd. operates a road construction business. In its first year of operations, the company won a contract to build a road for the municipality of Cochrane West. It is estimated that the project will be completed over a three-year period starting in June 2020. Martinez uses the percentage-of-completion method of recognizing revenue on its long-term construction contracts. For tax purposes, and in order to postpone the tax on such revenue for as long as possible, Martinez uses the completed- contract method allowed by the CRA. For the second year of operations, Martinez made progress on the construction of the road for the municipality. The account balances at December 31, 2020 and 2021, for the construction project and the accounting and tax balances of accounts related to the equipment used for construction follow: Accounts Receivable Asset/Liability (net of billings to date of $802,000 and $400,000) Revenue from Long-Term Contracts Construction Expenses Equipment Accumulated Depreciation-Equipment Undepreciated Capital Cost 2021 $115,000 127,000 429,000 417,000 1,100,000 456,000 613,000 2020 $320,000 100,000 500,000 350,000 1,100,000 170,000 980,000 Martinez's tax rate is 25% for 2020 and subsequent years. Income before income tax for the year ended December 31, 2020, was $195,000 and for December 31, 2021, was $121,000. Calculate the deferred tax asset or liability balances at December 31, 2021. Deferred tax LA eTextbook and Media List of Accounts Calculate taxable income and income tax payable for 2021. Taxable income $ $ Income tax payable $ eTextbook and Media List of Accounts Prepare a comparative income statement for 2020 and 2021, beginning with the line Income before income tax." Martinez Tar and Gravel Ltd. Comparative Income Statement (Partial) 2021 2020 $ $ $ $ Provide the statement of financial position presentation for any resulting deferred tax balance sheet accounts at December 31, 2020 and 2021. Martinez Tar and Gravel Ltd. Statement of Financial Position (Partial) 2021 2020 $ eTextbook and Media List of Accounts Provide the comparative balance sheet presentation for any resulting deferred tax balance sheet accounts at December 31, 2020 and 2021, assuming Martinez follows ASPE. Martinez Tar and Gravel Ltd. Comparative Balance Sheet (Partial) 2021 2020
