The following differences apply to the reconciliation of accounting income and taxable income of Gatsby Inc. for calendar 2018, its first year of operations. The enacted income tax rate is 30% for all years.

Accounting income $440,000

Differences: Excess CCA (220,000)

Lawsuit accrual 30,000

Unearned rent revenue deferred on the books

but correctly included in taxable income 20,000

Dividend income from Canadian corporations (12,000)

Taxable income $258,000

1. Excess CCA will reverse equally over a four-year period, 20192022.

2. It is estimated that the lawsuit accrual will be paid in 2022.

3. Unearned rent revenue will be recognized as earned equally over a four year period, 2019 2022. Instructions

a) Prepare a schedule showing the future taxable and deductible amounts expected per year over the years 2019-2022.

b) Prepare a schedule listing the various balance sheet accounts that contain timing differences, and calculating the deferred tax asset and/or deferred tax liability as at December 31, 2018