Two NOLs, No Temporary Differences, No Valuation Account

(Two NOLs, No Temporary Differences, No Valuation Account, Entries and Income Statement) Lanier Corporation has pretax financial income (or loss) equal to taxable income (or loss) from 2003 through 2011 as follows. Pretax financial income (loss) and taxable income (loss) were the same for all years since Lanier has been in business. Assume the carry back provision is employed for net operating losses. In recording the benefits of a loss carry forward, assume that it is more likely than not that the related benefits will be realized.

(a) What entry(ies) for income taxes should be recorded for 2007?

(b) Indicate what the income tax expense portion of the income statement for 2007 should look like.

Assume all income (loss) relates to continuing operations.

(c) What entry for income taxes should be recorded in 2008?

(d) How should the income tax expense section of the income statement for 2008 appear?

(e) What entry for income taxes should be recorded in 2011?

(f) How should the income tax expense section of the income statement for 2011 appear?

Income (Loss) Tax Rate 2003 $29,000 40,000 30% 2004 30% 35% 50% 2005 22,000 2006 2007 48,000 (150,000) 40% 40% 2008 90,0

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...