In 2020, its first year of operations, PRT Inc. reported a $ 500,000 loss for tax purposes. However, in 2021, Liu reported $ 200,000 taxable income. The tax rate is 25%, and is likely to remain at this rate for the foreseeable future. Harriet reports under IFRS.
Assume that, at the end of 2020, because it is a new company, PRT’s management thought that it was probable that the loss carry forward would not be realized in the near future.

Required:

a). What entries (if any) would be prepared in 2020 to record the loss carry forward?
b). Now assume that PRT reports under ASPE. What entries (if any) could be prepared in 2020 to recognize the loss carry forward?

Answer rating: 100% (QA)

2020 a No Entry for OTA Creation 2 Deffered Tax Assets will be created on Losses to be carr... View the full answer