CALCULATOR PRINTER VERSION BACK NEXT Exercise 19-25 (Part Level Submission) Boni

Question

CALCULATOR PRINTER VERSION BACK NEXT Exercise 19-25 (Part Level Submission) Bonita reported the following pretax financial income (loss) for the years 2015-2019. 2015 2016 $217,000 2017 2018 2019 362,000 98,000 (515,000) 192,000 Pretax financial income (loss) and taxable income (loss) were the same for all years involved. The enacted tax rate was 34% for 2015 and 2016, and 40% for 2017-2019. Assume the carryback provision is used first for net operating losses. (b) Prepare the income tax section of the 2018 income statement beginning with the line "Income (loss) before income taxes.". (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. Income Statement (Partial) For the Year Ended December 31, 2018 Income (loss) before income taxes Version 4.24 ax Policy I 92000-2018 John Wiley & Sons Inc, All Rights Reserved. A Division of John wiley & Sons Indc

Explanation / Answer

Solution b:

Loss carry back to 2016 = $362,000

Loss carryback to 2017 = 98000

Loss to be carried forward = $515,000 - $362,000 - $98,000 = $55,000

Income tax benefit due to loss carryback = ($362,000*34%) + ($98000*40%) = $162,280

Deferred tax assets for losses to be carry forward = $55,000 * 40% = $22,000

Income Statement - Partial - Bonita
For the year ended December 31, 2018 Particulars Amount Operating loss before income tax -$515,000.00 Income tax benefit: Income tax benefit - Loss Carryback 162280 Income tax benefit - Deferred Tax Assets 22000 $184,280.00 Net Loss -$330,720.00

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