Please explain why the taxes payable method is accepted for companies reporting under ASPE but not for those reporting under IFRS.

PART A (2 marks):

Please explain why the taxes payable method is accepted for companies reporting under ASPE but not for those reporting under IFRS. Please provide a hypothetical scenario of a company reporting under IFRS to illustrate your explanation.

PART B (12 marks):

Moira’s Roses Inc. (MRI) is a florist in Ontario, Canada.  MRI reports its financial statements in accordance with IFRS and has a December 31 year-end. The following information relates to the year ended December 31, 2021:

• MRI had revenues of $875,000 and operating expenses of $320,000.
• Depreciation on capital assets was $148,000. CCA claimed was $235,000.
• Dividends received from a taxable Canadian corporation were $18,000.
• Included in the operating expenses were meals and entertainment expenses for major customer accounts (half of which are deductible for tax purposes).
• MRI rented a temporary retail space for the holidays on December 1, 2021 for a 2-month period (December 2021 and January 2022) and prepaid the entire rent of $20,000.
• On December 1, 2021, MRI sold a warehouse building. Given the increase in retail values over the last 12 months, the building sold for $200,000. The asset was purchased 5 years ago for $190,000 and as at December 1, 2021 had a UCC of $120,000 and accumulated depreciation of $50,000.

Additional information:

On January 1, 2021, the tax rate was unexpectedly changed from 25% to 30% effective immediately. At that time MRI’s statement of financial position revealed opening balances of deferred tax liabilities related to CCA in excess of depreciation of $120,000 (ignore the effects of the building sold). MRI also had opening deferred tax assets related to deductible temporary differences of $200,000 related to warranty provisions.

Required:

Prepare all the necessary journal entries required to record income taxes for MRI for 2021.

If applicable, please show all journal entries related to current and deferred tax expenses, deferred tax assets, liabilities, and changes in tax rates separately.