Dean Corp., a company whose shares are listed on the TSX Venture Exchange,  reports the following pre-tax incomes (losses) for both financial reporting purposes and tax purposes:

Year                         Accounting Income (Loss)                               Tax Rate
2016                              $400,000                                                         30%
2017                                250,000                                                          30%
2018                                125,000                                                           30%
2019                                 33,333                                                            28%
2020                              (750,000)                                                         28%
2021                                 600,000                                                         21%


The tax rates listed were all enacted by the beginning of 2016.


Instructions

a) Assuming that it is more likely than not that 20% of the carry forward benefits, if any, will not be realized, prepare the journal entries for 2020 and 2021.
 
b) Based on your entries in part (a), prepare the income tax section of the 2020 and 2021 income statements, beginning with the line "Income (loss) before income tax."

Answer rating: 100% (QA)

a Journal entries for 2020 Dr Cr Deferred Tax Asset 600000... View the full answer