Exercise 19-22 Income (Loss) Tax Rate With calculations / explanations please Sk

Question

Exercise 19-22

Income (Loss)

Tax Rate

With calculations / explanations please

Skysong Corporation has pretax financial income (or loss) equal to taxable income (or loss) from 2009 through 2017 as follows:

Income (Loss)

Tax Rate

2009 $34,220 30% 2010 47,200 30% 2011 20,060 35% 2012 56,640 50% 2013 (177,000) 40% 2014 106,200 40% 2015 35,400 40% 2016 123,900 40% 2017 (70,800) 45%
Pretax financial income (loss) and taxable income (loss) were the same for all years since Skysong has been in business. Assume the carryback provision is employed for net operating losses. In recording the benefits of a loss carryforward, assume that it is more likely than not that the related benefits will be realized.

Explanation / Answer

Solution 1:

Solution 2:

Solution 3:

Net Operating loss carryback Amount Rate of Tax Tax Recorded as Carried back - 2011 $20,060.00 35% $7,021.00 Carried back - 2012 $56,640.00 50% $28,320.00 Total Carryback $76,700.00 $35,341.00 Income tax benefit Net Operating loss Carryforward Carried forward $100,300.00 Realisable benefits of loss carry forward $100,300.00 40% $40,120.00 Deferred tax assets

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