Nicaragua Ltd reported pretax accounting profit of $76 million for 2022. The following information relates to the differences between the pretax accounting profit and taxable profit: (a) In 2022, Nicaragua accrued an expense and related liability for the estimated staff bonus of $7 million relating to the company's new compensation program. Future compensation will be deductible on the tax return when actually paid during the next two years (54 million in 2023 and $3 million in 2024) (b) Nicaragua was assessed a penalty of $2 million by the Environmental Protection Agency for violation of law in 2022. This non-deductible fine is to be paid 1/2 in 2022 and 1/2 in 2023. (c) Income from installment sales of apartments included in pretax accounting profit in 2022 exceeded that reported for tax purposes by $3 million. The installment receivable account at the year-end had a balance of $4 million (representing portions of 2021 and 2022 installment sales), expected to be collected equally in 2023 and 2024. (d) Bad debt expense is reported using the allowance method, $3 million in 2022. For tax purposes, the expense is deducted when accounts prove uncollectible (the direct write-off method), $2 million in 2022. At December 31, 2022, the allowance for uncollectible accounts was $2 million (after adjusting entries). The balance was $1 million at the end of 2021. $2 million accounts proved uncollectible in 2023. (e) Nicaragua rents its operating facilities but owns one asset acquired in 2021 at a cost of $80 million. The followings show the depreciation expense recognized in the Income Statement of Nicaragua using the straight-line method assuming a four-year useful life and the depreciation allowances in the Tax Return in respect of the asset. Income Statement Tax Return Sm $m 2021 26 2022 20 35 2023 20 12 2024 20 7 20 Balances in the deferred tax asset and deferred tax liability accounts at January 1, 2022 were $0.6 million and $1.4 million, respectively. The tax rate is 20% each year. Requirement 1 Students are required to prepare a schedule that - Reconciles the differences between pretax accounting profit and taxable profit in 2022. - Determines the future taxable amounts and future deductible amounts. - Determines the tax payable, deferred tax liability and deferred tax asset at the end of 2022 based on the information given in the question in the space below: Requirement 2 Students are required to prepare the journal entries related to profits tax and deferred tax for 2022 below: Account Dr. Cr. Answer Questions 11 to 20 based on the information of Nicaragua Ltd given above. 11. Determine the total "future taxable amount" at 2022 year end: Future taxable amount: 12. What is the total "future deductible amount" at 2022 year end: Future deductible amount: 13. What is the taxable income for 2022? Taxable income: 14 Determine the income tax payable for 2017? Income tax payable: 15. What is the balance of the deferred tax liability at 2022 year end? Deferred tax liability: 16. Determine the amount should be credited to the deferred tax liability at 2022 year end. Amount credited to Deferred tax liability: 17. Calculate the balance of the deferred tax asset at 2022 year end? Deferred tax asset: Nicaragua Ltd reported pretax accounting profit of $76 million for 2022. The following information relates to the differences between the pretax accounting profit and taxable profit: (a) In 2022, Nicaragua accrued an expense and related liability for the estimated staff bonus of $7 million relating to the company's new compensation program. Future compensation will be deductible on the tax return when actually paid during the next two years (54 million in 2023 and $3 million in 2024) (b) Nicaragua was assessed a penalty of $2 million by the Environmental Protection Agency for violation of law in 2022. This non-deductible fine is to be paid 1/2 in 2022 and 1/2 in 2023. (c) Income from installment sales of apartments included in pretax accounting profit in 2022 exceeded that reported for tax purposes by $3 million. The installment receivable account at the year-end had a balance of $4 million (representing portions of 2021 and 2022 installment sales), expected to be collected equally in 2023 and 2024. (d) Bad debt expense is reported using the allowance method, $3 million in 2022. For tax purposes, the expense is deducted when accounts prove uncollectible (the direct write-off method), $2 million in 2022. At December 31, 2022, the allowance for uncollectible accounts was $2 million (after adjusting entries). The balance was $1 million at the end of 2021. $2 million accounts proved uncollectible in 2023. (e) Nicaragua rents its operating facilities but owns one asset acquired in 2021 at a cost of $80 million. The followings show the depreciation expense recognized in the Income Statement of Nicaragua using the straight-line method assuming a four-year useful life and the depreciation allowances in the Tax Return in respect of the asset. Income Statement Tax Return Sm $m 2021 26 2022 20 35 2023 20 12 2024 20 7 20 Balances in the deferred tax asset and deferred tax liability accounts at January 1, 2022 were $0.6 million and $1.4 million, respectively. The tax rate is 20% each year. Requirement 1 Students are required to prepare a schedule that - Reconciles the differences between pretax accounting profit and taxable profit in 2022. - Determines the future taxable amounts and future deductible amounts. - Determines the tax payable, deferred tax liability and deferred tax asset at the end of 2022 based on the information given in the question in the space below: Requirement 2 Students are required to prepare the journal entries related to profits tax and deferred tax for 2022 below: Account Dr. Cr. Answer Questions 11 to 20 based on the information of Nicaragua Ltd given above. 11. Determine the total "future taxable amount" at 2022 year end: Future taxable amount: 12. What is the total "future deductible amount" at 2022 year end: Future deductible amount: 13. What is the taxable income for 2022? Taxable income: 14 Determine the income tax payable for 2017? Income tax payable: 15. What is the balance of the deferred tax liability at 2022 year end? Deferred tax liability: 16. Determine the amount should be credited to the deferred tax liability at 2022 year end. Amount credited to Deferred tax liability: 17. Calculate the balance of the deferred tax asset at 2022 year end? Deferred tax asset