Refer to the information for Riley Inc. in E18-26.
In E18-26
Riley Inc. reports the following pre-tax incomes (losses) for both financial reporting purposes and tax purposes:

The tax rates listed were all enacted by the beginning of 2015. Riley reports under the ASPE future/deferred income taxes method.
Instructions
(a) Assume that Riley Inc. uses a valuation allowance to account for deferred tax assets, and also that it is more likely than not that 25% of the carryforward benefits will not be realized. Prepare the journal entries for 2017 and 2018.
(b) Based on your entries in part (a), prepare the income tax section of the 2017 and 2018 income statements, beginning with the line "Income (loss) before income tax."
(c) Indicate how the deferred tax asset account will be reported on the December 31, 2017 and 2018 balance sheets.
(d) Assume that on June 30, 2018 the enacted tax rates changed for 2018. Should management record any adjustment to the accounts? If yes, which accounts will be involved and when should the adjustment be recorded?
(e) Repeat part (c) assuming Riley Inc. follows IFRS.

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Year 2015 2016 2017 2018 Accounting Income (Loss) $120,000 90,000 (280,000) 220,000 Tax Rate 25% 25% 30% 30%