Nueve Ltd. had the following pre-tax earnings and losses: Year Pre-tax Earnings (Loss) Tax Rate 

20X3 $ 340,000 34 % 

20X4 175,000 34 

20X5 550,000 34 

20X6 670,000 36 

20X7 (3,340,000 ) 36 

20X8 385,000 36 

20X9 925,000 40 

The tax rates are those effective for the year indicated. The rates were enacted the year in which they became effective. Taxable income (loss) was equal to accounting earnings (loss) in each year. 

Required: 

1. Prepare the entry to record income tax expense for 20X7. At the end of 20X7, management estimates it is probable Nueve will utilize only $215,000 of the loss carryforward. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 

2. Prepare the entry to record income tax expense for 20X8 and 20X9. At the end of 20X8, management estimates it is probable Nueve will utilize the entire loss carryforward, not just the $215,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer rating: 100% (QA)

Question Page Solution when a loss is generally will be o... View the full answer