$($Two Differences, $2$ Years, Compute Taxable Income and Pretax Financial Income$)$ The following information was disclosed during the audit of Zheng Group.

Year Amount Due

per Tax Return

$2022130,000,000$

$2023104,000,000$

On January $1,2022,$ equipment costing $600,000,000$ is purchased. For financial reporting purposes, the company uses straight$-$line depreciation over a $5-$year life. For tax purposes, the company uses the double$-$declining balance method over $5$ years.

In January $2023,225,000,000$ is collected in advance rental of a building for a $3-$year period. The entire $225,000,000$ is reported as taxable income in $2023,$ but $150,000,000$ of the $225,000,000$ is reported as unearned revenue in $2023$ for financial reporting purposes. The remaining amount of unearned revenue is to be recognized equally in $2024$ and $2025.$

The tax rate is $40\%$ in $2022$ and all subsequent periods. $($Hint: To find taxable income in $2022$ and $2023,$ the related income taxes payable amounts will have to be $$grossed up$.)$

No temporary differences existed at the end of $2021.$ Zheng expects to report taxable income in each of the next $5$ years.

Instructions

Determine the amount to report for deferred income taxes at the end of $2022,$ and indicate how it should be classified on the statement of financial position.

Prepare the journal entry to record income taxes for $2022.$

Draft the income tax section of the income statement for $2022,$ beginning with $$Income before income taxes.$($Hint: You must compute taxable income and then combine that with changes in cumulative temporary differences to arrive at pretax financial income.$)$

Determine the deferred income taxes at the end of $2023,$ and indicate how they should be classified on the statement of financial position.

Prepare the journal entry to record income taxes for $2023.$

Draft the income tax section of the income statement for $2023,$ beginning with $$Income before income taxes.$$