Adelphi Corp. in its first year of operations has the following differences between its carrying amounts and the tax bases of its assets and liabilities at the end of 2017.

It is estimated that the warranty liability will be settled in 2018. The difference in equipment (net) will result in future taxable amounts of $20,000 in 2018, $30,000 in 2019, and $10,000 in 2020. The company has taxable income of $520,000 in 2017. As of the beginning of 2017, the enacted tax rate is 30% for 2017 to 2019 and 25% for 2020. Adelphi expects to report taxable income through 2020.
Instructions
(a) Prepare the journal entry to report current and deferred income tax expense.
(b) Indicate how deferred income taxes would be reported on the statement of financial position/balance sheet at the end of 2017 under IFRS and ASPE.

Transcribed Image Text:

Carrying Amount 400,000 Tax Basis Equipment (net) Estimated Warranty 340,000 Liabilities 200,000