Dix Company reported operating income/loss before income tax in its first three years of operations as follows:
Question:
Dix Company reported operating income/loss before income tax in its first three years of operations as follows:
2016................................$ 100,000
2017................................ (200,000)
2018..................................400,000
Dix had no permanent or temporary differences between book income and taxable income in these years. Dix elected to carry the 2017 loss back to the extent possible. Assume a 35% tax rate for all years, and assume there is no valuation allowance.
Required:
1. What amount should Dix report as a tax benefit on its 2017 income statement?
2. What amount of deferred tax asset should Dix report on its December 31, 2017, balance sheet?
3. What amount of taxes does Dix pay related to its 2018 tax return?
Step by Step Answer:
Requirement 1 Tax benefit reported in 2017income statement Loss carried back to 2016 100000 Loss car...View the full answer
Financial Reporting and Analysis
ISBN: 978-1259722653
7th edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer
