Warranty expense of $5 000 is recorded at the end of the 2016 financial year, and a further $5 000 warranty expense is recorded at the end of the 2017 financial year. During 2018, no expense is recorded, however warranty costs paid were $2 500.

The company tax rate is 30%.

required: For each of the three years (2016, 2017, 2018), calculate the carrying amount and tax base of the provision for warranty and prepare the deferred tax journal entry. Explain your answer.