Question:

Calculate the Future Tax Asset or Future Tax Liability account balances at December 31, 2020 and 2021.

I got an answer for 2020 but got wrong for 2021.

I appreciate if you can show me a solution with an answer for 2021.

Concord Engines Ltd., a private business following ASPE, operates small engine repair outlets and is a tenant in several of Tran Holdings Inc.'s strip shopping malls. Concord signed several lease renewals with Tran that each called for a three-month rent-free period. The leases start at various dates and are for three to five years each. As with all of Tran's tenants, Concord pays rent quarterly, three months in advance, and records the payments initially to Prepaid Rent. The rent-free period obtained in the lease agreement with Tran Holdings Inc. reduces the overall rental costs of the outlets over the term of each lease. Concord's accounting policy requires the leasing costs of each outlet to be allocated evenly over the term of the lease to fairly match expenses with revenues. Concord accrues rent expense during the rent-free period to an account called Rent Payable. Following the rent-free period, the Rent Payable account is amortized to Rent Expense over the remaining term of the lease. For tax purposes, Concord must use the cash basis and is unable to deduct the rent expense accrued during the rent-free periods. On its tax return, Concord can deduct the actual rent payments only when they are made. The following are balances for the accounts related to prepaid rent and rent payable under leases as well as payments for interest to earn tax-exempt income and payments for golf club dues for the years ended December 31, 2021 and 2020: In 2020, Concord's tax rate is 28%, and for subsequent years it is 27%. Income before income tax for the year ended December 31 , 2020 was $929,000. During 2021 , Concord's tax rate changed to 29% for 2021 and subsequent years. Income before income tax for the year ended December 31,2021 was $1,067,000