Exercise 16-20 Net operating loss carryforward

During 2018, its first year of operations, Baginski Steel Corporation reported a net operating loss of $450,000 for financial reporting and tax purposes. The enacted tax rate is 40%. Required: 1. Prepare the journal entry to recognize the income tax benefit of the net operating loss. Assume the weight of available evidence suggests future taxable income sufficient to benefit from future deductible amounts from the net operating loss carryforward. 2. Show the lower portion of the 2018 income statement that reports the income tax benefit of the net operating loss.

Complete this question by entering your answers in the tabs below.

Required 1

Prepare the journal entry to recognize the income tax benefit of the net operating loss. Assume the weight of available evidence suggests future taxable income sufficient to benefit from future deductible amounts from the net operating loss carryforward. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in thousands.)

Journal entry worksheet

• Record 2018 income tax benefit from operating loss.

Note: Enter debits before credits.

Event	General Journal	Debit	Credit
1

Required 2

Show the lower portion of the 2018 income statement that reports the income tax benefit of the net operating loss. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands.)