Answer the questions below. Complete the questions in order, and label your work.

Question $1(30$ marks$)$

Bob$$s Bait Shop Inc., a chain of fishing stores, sponsors a defined benefit pension plan for its employees. The plan$$s trustee reports the following information for calendar $2023$:

Defined benefit obligation, Jan $1$

$$240,000$

Fair value of plan assets, Jan $1$

$180,000$

Current service cost

$80,000$

Actual return on plan assets

$21,000$

Contributions $($made at the end of the year$)$

$80,000$

Benefits paid to retirees

$120,000$

Interest $($discount$)$ rate

$10\%$

Past service costs $($effective Jan. $1,2023)$

$10,000$

The expected return on plan assets is $10\%$ of the beginning balance.

Required

Complete the following with the details provided.

Fill in the pension spreadsheet below. Include ending balances.

Remeasurement

Gain$/$loss

Pension expense

Cash

Net Defined Benefit Liab$/$asset

DBO

Plan assets

$60,000$ cr

$240,000$

$180,000$

Current service cost

Past service costs

Interest cost

Expected return

Remeasurement gain$/$loss

Cash paid

Benefits paid

Prepare the required pension$-$related journal entries. Use standard journal entry format.

Question $2(40$ marks$)$

Bentall Ink is a chain of tattoo parlors that follows IFRS. The following data is for Year $8$:

Golf club dues were $$20,000.$ Fines for operating without the proper city zoning were $$10,000.$

Automated tattoo machinery was acquired on January $1,$ Year $7,$ for $$150,000.$ Straight$$line depreciation is over a $10$year life with a $$20,000$ residual value. For taxes, the $30\%$ rate class is used, and Bentall Ink applied the CRA one$-$and$-$a$-$half$-$year rule in Year $7.$

On December $31,$ Year $8,$ Bentall Ink accrued a provision for legal expense of $$40,000.$ The estimated legal liability of $$40,000$ relates to four pending lawsuits. In addition to the $$40,000$ provision, legal costs paid out in cash during Year $8$ were $$60,000.$ This related to lawsuits started and settled during Year $8.$ Bentall Ink believes that the new automated equipment will reduce the number of lawsuits.

Pretax accounting income for Year $8$ is $$800,000.$ The income tax rate is $25\%.$

Required

Complete the following with the details provided.

Prepare a schedule, starting with pretax accounting income, to calculate taxable income. On your schedule, indicate a subtotal for accounting income after permanent differences. Round your final answer to the nearest dollar.

Prepare the tax$-$related journal entries for Year $8.$

What is the dollar amount of income tax expense on the Year $8$ Bentall Ink income statement?

Question $3(30$ marks$)$

Accounting income or loss for Aberdeen Corporation, following IFRS, is below:

Year

Accounting income$/($loss$)$

Tax rate percent

Year $1$

$$160,000$

$30$

Year $2$

$250,000$

$30$

Year $3$

$80,000$

$25$

Year $4$

$(160,000)$

$25$

Year $5$

$(380,000)$

$25$

Year $6$

$130,000$

$25$

Year $7$

$145,000$

$25$

Assume that there were no permanent or temporary differences between accounting and taxable income.

Required

Prepare the tax$-$related journal entries for Year $3$ to Year $7.$ Aberdeen Corporation believes that it will be able to use any loss carryforward in future years. Aberdeen Corporation will apply the available carryback provisions to the earliest years first. Include your calculations.