Question

Dix Company reported operating income/loss before income tax in its first three years of\ operations as follows:
2013 . $ 100,000
2014 . (200,000)
2015 .. 400,000
Dix had no permanent or temporary differences between book income and taxable income in these years. Dix elected to carry the 2014 loss back to the extent possible. Assume a 40% tax rate for all years.

Required:
1. What amount should Dix report as a tax benefit on its 2014 income statement?
2. What amount of deferred tax asset should Dix report on its December 31, 2014, balance sheet?
3. What amount should Dix report as current taxes payable on December 31, 2015 (the year after the loss)?



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  • CreatedSeptember 10, 2014
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