Whispering Winds Inc. reports the following pre-tax incomes (losses) for both financial reporting purposes and tax purposes: Year 2018 2019 2020 2021 Accounting Income (Loss) $121,000 98,000 (295,000) 221,000 Tax Rate 25 % 25 % 30 % 30 % The tax rates listed were all enacted by the beginning of 2018. Whispering Winds reports under the ASPE future/deferred income taxes method. Assume that Whispering Winds Inc. uses a valuation allowance to account for deferred tax assets, and also that it is more likely than not that 25% of the carryforward benefits will not be realized. Prepare the journal entries for 2020 and 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Debit Credit Date Account Titles and Explanation 2020 (To record benefit from loss carryback) (To record future benefit from loss carryforward) (To adjust future tax asset account to net realizable value) 2021 (To record current tax expense) (To record future tax expense) (To adjust future tax asset account to net realizable value) Based on your above entries, prepare the income tax section of the 2020 and 2021 income statements, beginning with the line Income (loss) before income tax" (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Whispering Winds Inc. (Partial) Income Statement $ ta $ $ Whispering Winds Inc. (Partial) Income Statement + $ + $ TA $ Indicate how the deferred tax asset account will be reported on the December 31, 2020 and 2021 statements of financial position. (Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45). Do not leave any answer field blank. Enter 0 for amounts.) Whispering Winds Inc. (Partial) Balance Sheet December 31 2020 2021 $ $ $ ta $ $ Based on your above entries, prepare the income tax section of the 2020 and 2021 income statements, beginning with the line Income (loss) before income tax" (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Whispering Winds Inc. (Partial) Income Statement $ ta $ $ Assume that on June 30, 2021, the enacted tax rates changed for 2021. Should management record any adjustment to the accounts? eTextbook and Media List of Accounts If yes, which accounts will be involved? . When should the adjustment be recorded? This adjustment should be recorded Indicate how the deferred tax asset account will be reported on the December 31, 2020 and 2021 statements of financial position, assuming Whispering Winds Inc. follows IFRS. (Do not leave any answer field blank. Enter 0 for amounts.) Whispering Winds Inc. (Partial) Balance Sheet December 31 2020 2021 $ $
