In December 20X5, Mighty IT Co revalued its corporate headquarters. Prior to the revaluation, the carrying amount of the building was $2m and it was revalued to $2.5m. Mighty IT Co also revalued a sales office on the same date. The office had been purchased for $500,000 earlier in the year, but subsequent discovery of defects reduced its value to $400,000. No depreciation had been charged on the sales office and any impairment loss is allowable for tax purposes. In January 20X6, the accountant at Mighty IT Co produced the company’s draft financial statements for the year ended 31 December 20X5. He then realized that he had omitted to consider deferred tax on development costs. In 20X5, development costs of $200,000 had been incurred and capitalized. Development costs are deductible in full for tax purposes in the year they are incurred. The development is still in process at 31 December 20X5. Mighty IT Co’s income tax rate is 30 per cent.

Required: 

(a) In accordance with IAS 12 Income Taxes, what is the impact of the property revaluations on the income tax expense of Mighty IT Co for the year ended 31 December 20X5?

(b) What adjustment is required to the income tax expense in Mighty IT Co’s statement of profit or loss for the year ended 31 December 20X5 to account for deferred tax on the development costs?