Dean Corp., a company whose shares are listed on the TSX Venture Exchange, reports the following pre-tax
Question:
Dean Corp., a company whose shares are listed on the TSX Venture Exchange, reports the following pre-tax incomes (losses) for both financial reporting purposes and tax purposes:
Year Accounting Income (Loss) Tax Rate
2016 $400,000 30%
2017 250,000 30%
2018 125,000 30%
2019 33,333 28%
2020 (750,000) 28%
2021 600,000 21%
The tax rates listed were all enacted by the beginning of 2016.
Instructions
a) Assuming that it is more likely than not that 20% of the carry forward benefits, if any, will not be realized, prepare the journal entries for 2020 and 2021.
b) Based on your entries in part (a), prepare the income tax section of the 2020 and 2021 income statements, beginning with the line "Income (loss) before income tax."
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield