Problem 3 (23 Marks)
The following information is available for the first three years of operations for Faberge Corporation:
1	Year	Taxable Income
	2023	$250,000
	2024	180,000
	2025	200,000
2	On January 2, 2023, equipment was purchased for $500,000. The equipment
	had an estimated service life of 5 years and no residual value. Straight-line
	depreciation is used for book purposes and CCA at 30% is used for tax
	purposes (subject to the accelerated investment incentive).
3	On January 2, 2024, $210,000 was collected in advance for the rental of a
	building for three years. The entire $210,000 was included in taxable income
	in 2024, but two-thirds of the $210,000 was reported as unearned revenue
	at December 31, 2024 for book purposes.
4	The enacted tax rate is 40% for all years.
Instructions:
a) Prepare a schedule comparing depreciation for book purposes with CCA for tax purposes.
b) Determine the deferred tax asset or liability at the end of 2023.
c) Prepare a schedule of future taxable and deductible amounts at the end of 2024
d) Prepare a schedule of the deferred tax asset and/or liability at the end of 2024
e) Calculate the net deferred tax expense or benefit for 2024.
f) Prepare the adjusting entries to record income tax expense, deferred taxes, and income tax payable for 2024.
g) CRITICAL THINKING In the context of predicting future cash flows, why is the deferred/future income tax
method more appropriate than the taxes payable method for this company?