Exercises 1101 Income (Loss) Tax Rate 2009 2010 2011 2012 2013 2014 2015 2016 20

Question

Exercises 1101 Income (Loss) Tax Rate 2009 2010 2011 2012 2013 2014 2015 2016 2017 $ 29,000 40,000 17,000 48,000 (150,000) 90,000 30,000 105,000 (60,000) 30% 30 35 50 40 40 40 40 45 Pretax financial income (loss) and taxable income (loss) were the same for all years since Rashad 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 Instructions (a) What entry(ies) for income taxes should be recorded for 2013? (b) Indicate what the income tax expense portion of the income statement for 2013 should look like. Assume all income (loss) relates to continuing operations (c) What entry for income taxes should be recorded in 2014? (d) How should the income tax expense section of the income statement for 2014 appear? (e) What entry for income taxes should be recorded in 2017? (f) How should the income tax expense section of the income statement for 2017 appear? E19-23 (L03) (NOL Carryback and Carryforward, Valuation Account versus No Valuation Account) Spamela Hamderson Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes. (Assume the carryback provision is used for a net operating loss.) ear 2015 2016 Pretax Income (Loss) $120,000 Tax Rate 34% 34 90,000

Explanation / Answer

Solution a:

Solution b:

Solution c:

Solution d:

Solution e:

Solution f:

Adjusting Journal Entries - Spamela Handerson Inc. Date Particulars Debit Credit 31-Dec-13 Receivables - Income Tax Refund Dr
($17,000*35%+ $48,000*50%) $29,950.00 Deferred Tax Assets Dr
[($150,000 - $65,000)*40%] $34,000.00            To Income tax benefit - Net Operating Loss $63,950.00 (Being income tax benefit due to loss carryback and loss carry forward recorded)

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