XYZ is a Canadian-controlled public company. The company has a December 31 fiscal year end. The company has a policy of using loss carrybacks in the earliest possible year. Data concerning the earnings of the company for 20x6 and 20x7 are as follows: 20x6 (95,000) 20x7 35.000 Earnings (loss) before income tax Amounts included in income Investment income Depreciation expense - equipment Depreciation expense - development costs Amounts deducted for income tax Capital Cost Allowance Development Expenditures Income Tax Rate 1,250 31,000 19,000 1.750 34.000 21.000 26.000 3796 27.000 14.000 3896 Other Information: Taxable income and the income tax rates for 20x2 through 20x5 are as follows: Year 20x2 20x3 20x4 20x5 Taxable Income (loss) 7,500 12,500 8,000 (12,500) Tax Rate 4096 4096 4096 41% At December 31 20x5, equipment had net book value of 580,000 and UCC of At December 31, 20x5, the SFP showed an unamortized balance of development costs of The investment income consists of dividends from taxable Canadian corporations 320.000 195,000 under 'other assets' 1. For each of 20x6, and 20x7, prepare the journal entry or entries to record income tax expense. Assume that management judges that it is probable that the full benefit of any tax loss carryforward will be realized within the carryforward. 2. Show how the deferred tax amounts would appear on the 20x6 year-end SFP 3. Suppose that the 20x7 management decided in 20x8 that it was probable that the company would only use 9,000 of the remaining gross tax loss carryforward. a. show the entry that would be made to reduce the carryforward benefit b. what impact would this entry have on the 20x8 financial statements? XYZ is a Canadian-controlled public company. The company has a December 31 fiscal year end. The company has a policy of using loss carrybacks in the earliest possible year. Data concerning the earnings of the company for 20x6 and 20x7 are as follows: 20x6 (95,000) 20x7 35.000 Earnings (loss) before income tax Amounts included in income Investment income Depreciation expense - equipment Depreciation expense - development costs Amounts deducted for income tax Capital Cost Allowance Development Expenditures Income Tax Rate 1,250 31,000 19,000 1.750 34.000 21.000 26.000 3796 27.000 14.000 3896 Other Information: Taxable income and the income tax rates for 20x2 through 20x5 are as follows: Year 20x2 20x3 20x4 20x5 Taxable Income (loss) 7,500 12,500 8,000 (12,500) Tax Rate 4096 4096 4096 41% At December 31 20x5, equipment had net book value of 580,000 and UCC of At December 31, 20x5, the SFP showed an unamortized balance of development costs of The investment income consists of dividends from taxable Canadian corporations 320.000 195,000 under 'other assets' 1. For each of 20x6, and 20x7, prepare the journal entry or entries to record income tax expense. Assume that management judges that it is probable that the full benefit of any tax loss carryforward will be realized within the carryforward. 2. Show how the deferred tax amounts would appear on the 20x6 year-end SFP 3. Suppose that the 20x7 management decided in 20x8 that it was probable that the company would only use 9,000 of the remaining gross tax loss carryforward. a. show the entry that would be made to reduce the carryforward benefit b. what impact would this entry have on the 20x8 financial statements