Kleckner Company started operations in 2010. Although it has grown steadily the

Kleckner Company started operations in 2010. Although it has grown steadily the company reported accumulated operating losses of $450000 in its first four years in business. In the most recent year (2014) Kleckner appears to have turned the corner and reported modest taxable income of $30000. In ad- dition to a deferred tax asset related to its net operating loss Kleckner has recorded a deferred tax asset related to product warranties and a deferred tax liability related to accelerated depreciation. Given its past operating results Kleckner has determined that it is not probable that it will realize any of the deferred tax assets. However given its improved performance Kleckner management wonders whether there are any accounting consequences for its deferred tax assets. They would like you to conduct some research on the accounting for recognition of its deferred tax asset. Instructions Access the IFRS authoritative literature at the IASB website ( http://eifrs.iasb.o r g/ ) . (Click on the IFRS tab and then register for free eIFRS access if necessary.) When you have accessed the documents you can use the search tool in your Internet browser to respond to the following questions. (Provide paragraph citations.) (a) Briefly explain to Kleckner management the importance of future taxable income as it relates to the recognition of deferred tax assets. (b) What are the sources of income that may be relied upon in assessing realization of a deferred tax asset? (c) What are tax-planning strategies? From the information provided does it appear that Kleckner could employ a tax-planning strategy in evaluating its deferred tax asset?

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