Caycuse Inc. (Caycuse) has just completed its first year of operations on December 31, 2014. The company owns a single asset that cost $150,000. For tax purposes Caycuse can deduct $22,500 in CCA in calculating its taxable income in 2014. Assume that Caycuse’s tax rate is 12 percent.

Required:

a. Determine the future income tax asset or liability on December 31, 2014, if Caycuse depreciates its asset on a straight-line basis over 10 years.

b. Determine the future income tax asset or liability on December 31, 2014, if Caycuse depreciates its asset on as traight-line basis over five years.

c. Determine the future income tax asset or liability on December 31, 2014, if Caycuse depreciates its asset on a declining balance basis at 30 percent per year.

d. Determine the future income tax asset or liability on December 31, 2014, if Caycuse depreciates its asset using the same basis used for tax purposes.

e. According to the IFRS characteristics for determining whether a liability exists, is a future income tax liability really a liability? Should a future income tax asset be considered an asset? How would you interpret the future income tax assets or liabilities that you calculated in parts

(a) through

(d) above?