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Barron Inc. is a publicly accountable entity. The controller has compiled all of the information necessary for you to calculate the income tax provision for the year ended December 31, 20x6: The opening balance in the deferred income tax account was calculated as follows: NBV/UCC difference (NBV = $4,500,000) $600,000 cr. Warranty liability of $240,000 72,000 dr. Loss carry forward of $600,000 180,000 dr. $348,000 cr. Data for the year ended December 31, 20x6: Net income before taxes $3,700,000 Depreciation expense 450,000 CCA 570,000 Proceeds received on sale of PPE (original cost = $200,000, carrying value = $120,000) 150,000 Additions to PPE 600,000 Warranty expense 320,000 Warranty costs incurred 275,000 Revenues realized for accounting purposes but only taxable in 20x7 250,000 Expenses deducted for accounting purposes but only deductible for tax purposes in 20x8 85,000 Club dues 16,000 Dividends received from taxable Canadian corporations 6,000 Entertainment expenses 18,000 The tax rate for the year ended December 31, 20x6 is 27%. On December 31, 20x6, the tax rate for 20x7 was enacted at 23%. Barron's tax strategy is to minimize income taxes payable in a given year. Required - (a) (b) (c) (d) What was the tax rate used when calculating the DIT account at December 31, 20x5? What is the balance in the deferred income tax account at December 31, 20x6? Calculate the current portion and deferred portion of income tax expense for the year ended December 31, 20x6. Show the presentation of the bottom part of the Statement of Income starting with the line Net income before taxes'. Assume now that Barron is a private company subject to ASPE. 1. What would Barron's income tax expense be if they opted for the taxes payable method? How would the future income tax account be presented on the Balance Sheet as at December 31, 20x6 if Barron opted to use the income tax allocation method? 2. Barron Inc. is a publicly accountable entity. The controller has compiled all of the information necessary for you to calculate the income tax provision for the year ended December 31, 20x6: The opening balance in the deferred income tax account was calculated as follows: NBV/UCC difference (NBV = $4,500,000) $600,000 cr. Warranty liability of $240,000 72,000 dr. Loss carry forward of $600,000 180,000 dr. $348,000 cr. Data for the year ended December 31, 20x6: Net income before taxes $3,700,000 Depreciation expense 450,000 CCA 570,000 Proceeds received on sale of PPE (original cost = $200,000, carrying value = $120,000) 150,000 Additions to PPE 600,000 Warranty expense 320,000 Warranty costs incurred 275,000 Revenues realized for accounting purposes but only taxable in 20x7 250,000 Expenses deducted for accounting purposes but only deductible for tax purposes in 20x8 85,000 Club dues 16,000 Dividends received from taxable Canadian corporations 6,000 Entertainment expenses 18,000 The tax rate for the year ended December 31, 20x6 is 27%. On December 31, 20x6, the tax rate for 20x7 was enacted at 23%. Barron's tax strategy is to minimize income taxes payable in a given year. Required - (a) (b) (c) (d) What was the tax rate used when calculating the DIT account at December 31, 20x5? What is the balance in the deferred income tax account at December 31, 20x6? Calculate the current portion and deferred portion of income tax expense for the year ended December 31, 20x6. Show the presentation of the bottom part of the Statement of Income starting with the line Net income before taxes'. Assume now that Barron is a private company subject to ASPE. 1. What would Barron's income tax expense be if they opted for the taxes payable method? How would the future income tax account be presented on the Balance Sheet as at December 31, 20x6 if Barron opted to use the income tax allocation method? 2