Lochness Inc. began operation on January, 2020. The company had the following information pertaining the fiscal...

 

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Lochness Inc. began operation on January, 2020. The company had the following information pertaining the fiscal years ended December 31, 2020 to 2023: Accounting income (loss) before tax Taxable income (loss) Deferred income tax liability related to equipment 2020 $200,000 200,000 2021 ($700,000) (700,000) 2022 $325,000 265,000 19,800 2023 $710,000 494,000 71,280 The 2020 and 2021 tax rate was 29%. The 2022 and 2023 tax rate was 33%. Tax rates were enacted in the year to which they pertain. The only temporary difference relates to equipment, which the company purchased in 2022. There were no permanent differences in any of the years. Required: Prepare the tax journal entries for each of the years 2021 to 2023, assuming that it is probable that the loss carryforward benefit would be realized. Please provide one combined journal entry for each of the years. Use "Deferred income tax asset - LCF" to denote the deferred tax asset related to loss carryforwards. (13 marks) Lochness Inc. began operation on January, 2020. The company had the following information pertaining the fiscal years ended December 31, 2020 to 2023: Accounting income (loss) before tax Taxable income (loss) Deferred income tax liability related to equipment 2020 $200,000 200,000 2021 ($700,000) (700,000) 2022 $325,000 265,000 19,800 2023 $710,000 494,000 71,280 The 2020 and 2021 tax rate was 29%. The 2022 and 2023 tax rate was 33%. Tax rates were enacted in the year to which they pertain. The only temporary difference relates to equipment, which the company purchased in 2022. There were no permanent differences in any of the years. Required: Prepare the tax journal entries for each of the years 2021 to 2023, assuming that it is probable that the loss carryforward benefit would be realized. Please provide one combined journal entry for each of the years. Use "Deferred income tax asset - LCF" to denote the deferred tax asset related to loss carryforwards. (13 marks)

Answer rating: 100% (QA)

SOLUTION To prepare the tax journal entries for each of the years 2021 to 2023 we need to calculate ... View the full answer