Scarlett Corporation reported accounting income before taxes as follows: \(20 \mathrm{X} 4, \$ 150,000 ; 20 \mathrm{X} 5, \$ 92,000\). Taxable income for each year would have been the same as pre-tax accounting income except for the tax effects, arising for the first time in \(20 \mathrm{X} 4\), of \(\$ 2,400\) in rent revenue, representing \(\$ 400\) per month rent revenue collected in advance on 1 October 20X4, for the six months ending 31 March 20X5. Rent revenue is taxable in the year collected. The tax rate for 20X4 and 20X5 is \(40 \%\), and the year-end for both accounting and tax purposes is 31 December. The rent revenue collected in advance is the only difference, and it is not repeated in October 20X5.

Required:

1. Is this a temporary difference? Why or why not?

2. What is the accounting carrying value for the unearned rent at the end of \(20 \times 4\) ? The tax basis? Explain.

3. Calculate taxable income, and income tax payable, and prepare journal entries for each year-end.

4. Prepare a partial statement of profit and loss for each year, starting with pre-tax accounting income.

5. What amount of deferred income tax would be reported on the \(20 \times 4\) and \(20 \times 5\) statements of financial position?