Spamela Hamderson Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes.
Question:
Spamela Hamderson Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes.
The tax rates listed were all enacted by the beginning of 2018.
Instructions
a. Prepare the journal entries for the years 2018?2021 to record income tax expense (benefit) and income taxes payable (refundable) and the tax effects of the loss carryforward, assuming that at the end of 2020 the benefits of the loss carryforward are judged more likely than not to be realized in the future.
b. Using the assumption in (a), prepare the income tax section of the 2020 income statement beginning with the line ?Operating loss before income taxes.?
c. Prepare the journal entries for 2020 and 2021, assuming that based on the weight of available evidence, it is more likely than not that one-fourth of the benefits of the loss carryforward will not be realized.
d. Using the assumption in (c), prepare the income tax section of the 2020 income statement beginning with the line ?Operating loss before income taxes.?
Step by Step Answer:
a 19 X 280000 b Operating loss before income taxes 280000 Income tax benefit Deferred 53200 Net ...View the full answer
Intermediate Accounting
ISBN: 978-1119503668
17th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfiel
