Question

As of December 31, 2014, Colt Corporation has a loss carryforward of $180,000 available to offset future taxable income. At December 31, 2014, the company believes that realization of the tax benefit related to the loss carryforward is probable. The tax rate is 30%.

Required:
1. What amount of the tax benefit should be reported in Colt’s 2014 income statement assuming
(a) the loss carryforward arose in 2014 and
(b) the loss carryforward arose prior to 2014?
2. What additional account(s) would be affected when the loss carryforward is recognized?



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  • CreatedSeptember 10, 2014
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