During its first year of operations, Kinkle Corporation reported the following information:

■ Income before income taxes for the year was $450,000 and the tax rate was 30%. 

■ Depreciation expense was $195,000 and capital cost allowance was $97,500. The carrying amount of property, plant, and equipment at the end of the year was $620,000, while unde-preciated capital cost was $717,500. 

■ Warranty expense was reported at $160,000, while actual cash paid out was $75,000. 

■ $45,000 of expenses included in income were not deductible for tax purposes. 

■ No other items affected deferred tax amounts besides these transactions. 

Required: 

a. Prepare the journal entries to record income tax expense for the year. 

b. Assume Kinkle reported a loss instead of income in its first year of operations. Explain what accounting policy choices are available to Kinkle to record the tax implications of the loss, and provide a recommendation.