Calculate the deferred tax balances ayayai corporation

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Ayayai Corporation purchased equipment very late in 2020. Based on generous capital cost allowance rates provided in the Income Tax Act, Ayayai Corporation claimed CCA on its 2020 tax return but did not record any depreciation because the equipment was being tested. This temporary difference will reverse and cause taxable amounts of $25,100 in 2021, $30,100 in 2022, and $40,100 in 2023. Ayayai's accounting income for 2020 is $202,600 and $178,600 in each of 2021 and 2022, and the tax rate is 30%. There are no deferred tax accounts at the beginning of 2020. Ayayai Corporation was informed on December 31, 2021 that the enacted rate for 2022 and subsequent years is 25%.

Required

Calculate the deferred tax balances at December 31, 2021 and 2022.

Reference no: EM132420321

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