On January 1, 2010, Canadian Corporation purchased a new capital asset costing $51,000. The company estimated the asset would have a useful life of five years and a $3,000 residual value. The company uses straight-line amortization for book purposes, and the asset qualifies for a 30% capital cost allowance (CCA) rate for tax purposes. The company closes its books on December 31, its earnings before depreciation and taxes are $90,000 in both 2010 and 2011, and the income tax rate is 40%.

Required:
a. Calculate the depreciation expense and the CCA for 2010 and 2011, and determine what the net book value of the asset and its undepreciated capital cost will be at the end of each of these years.
b. Calculate the income taxes payable in 2010 and 2011, and determine what the deferred income tax asset or liability balance will be at the end of each of these years. (Hint: You should find that the deferred income tax account will be an asset at the end of 2010 and a liability at the end of 2011.)
c. Explain why the deferred income tax account changes as it does, over this two-year period.
d. Give the journal entry to record the company's income taxes for 2010 and 2011.