Lu Ltd. has experienced the following accounting and taxable income:

	Accounting Earnings			Taxable Income*			Tax Rate
20X4	$	(97,000)		$	(73,000)			34	%
20X5		91,000			55,500			36
20X6		101,000			93,000			34
20X7		61,000			(99,000)			30

Before applying any available tax loss carryforwards

The differences between accounting and taxable income are caused by differences between accounting and tax expenses that will not reverse (permanent differences). All tax rates are enacted in the year to which they relate.

Required:
1. Record income tax for 20X4 through 20X7 assuming that the future use of tax loss carryforwards is not considered to be probable.

2. Repeat requirement 1, assuming that the use of tax loss carryforwards is considered to be probable in the loss year.

Answer rating: 100% (QA)

1 Income Tax Year Accounting Income Tax Rate Tax 20X4 97000 34 32780 20X5 91000 36 32760 20X6 10100... View the full answer