Net Operating Loss Carryforward The net operating loss is considered as negative taxable income. When the tax-deductible expenses exceed the taxable revenues, the net operating loss is carry forwarded as it helps in getting deductions in future taxable amount. Net Operating Loss Carryback The net operating loss is considered as negative taxable income. It can be used in other fiscal year to offset the taxable income. The net operating loss carry back helps the companies to get reduction in the taxes from the past profitable years, in the form of tax refund, for the tax paid on the profit earned on those years. Temporary Difference Temporary difference refers to the difference of one income recognized by the tax rules and accounting rules of a company in different periods. Consequently, the difference between the amount of assets and liabilities reported in the financial reports and the amount of assets and liabilities as per the company’s tax records, is known as temporary difference. Multiple Temporary Difference It is very unlikely to have a single temporary difference in any company. In that case, the same concept of temporary difference will be applicable for multiple temporary difference. In case of multiple temporary difference, we have to categorize all temporary difference into future taxable amount and future deductible amounts. The total amount of future taxable amounts multiplied by future tax rate will generate deferred tax liability and total amount of future deductible amount multiplied by future tax rate will generate deferred tax asset . To prepare: The journal entry to recognize the income tax benefit of the net operating loss in 2018 through carryback option.

Question

Want to see the full answer?

Answer 1

Question

Chapter 16, Problem 16.10P

1.

To determine

Net Operating Loss Carryforward

The net operating loss is considered as negative taxable income. When the tax-deductible expenses exceed the taxable revenues, the net operating loss is carry forwarded as it helps in getting deductions in future taxable amount.

Net Operating Loss Carryback

The net operating loss is considered as negative taxable income. It can be used in other fiscal year to offset the taxable income. The net operating loss carry back helps the companies to get reduction in the taxes from the past profitable years, in the form of tax refund, for the tax paid on the profit earned on those years.

Temporary Difference

Temporary difference refers to the difference of one income recognized by the tax rules and accounting rules of a company in different periods. Consequently, the difference between the amount of assets and liabilities reported in the financial reports and the amount of assets and liabilities as per the company’s tax records, is known as temporary difference.

Multiple Temporary Difference

It is very unlikely to have a single temporary difference in any company. In that case, the same concept of temporary difference will be applicable for multiple temporary difference. In case of multiple temporary difference, we have to categorize all temporary difference into future taxable amount and future deductible amounts. The total amount of future taxable amounts multiplied by future tax rate will generate deferred tax liability and total amount of future deductible amount multiplied by future tax rate will generate deferred tax asset.

To prepare: The journal entry to recognize the income tax benefit of the net operating loss in 2018 through carryback option.

2.

To determine

To show: The lower portion of the 2018 income statement that reports the income tax benefit of the net operating loss.

3.

To determine

To prepare: The journal entry to record the income taxes in 2019 assuming pre-tax accounting income is $60 million.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

P10.1 (LO 1 ) (Classification of Acquisition and Other Asset Costs) At December 31, 2019, certain accounts included in the property, plant, and equipment section of Reagan Company's balance sheet had the following balances. Land $230,000 Buildings 890,000 Leasehold improvements 660,000 Equipment 875,000 During 2020, the following transactions occurred. 1.Land site number 621 was acquired for $850,000. In addition, to acquire the land Reagan paid a $51,000 commission to a real estate agent. Costs of $35,000 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for $13,000. 2.A second tract of land (site number 622) with a building was acquired for $420,000. The closing statement indicated that the land value was $300,000 and the building value was $120,000. Shortly after acquisition, the building was demolished at a cost of $41,000. A new building was constructed for $330,000 plus the…

P11.1 (LO 2 ) (Depreciation for Partial Period—SL, SYD, and DDB) Alladin Company purchased Machine #201 on May 1, 2020. The following information relating to Machine #201 was gathered at the end of May. Price $85,000 Credit terms 2/10, n/30 Freight-in $ 800 Preparation and installation costs $ 3,800 Labor costs during regular production operations $10,500 It is expected that the machine could be used for 10 years, after which the salvage value would be zero. Alladin intends to use the machine for only 8 years, however, after which it expects to be able to sell it for $1,500. The invoice for Machine #201 was paid May 5, 2020. Alladin uses the calendar year as the basis for the preparation of financial statements. Instructions a. Compute the depreciation expense for the years indicated using the following methods. (Round to the nearest dollar.) 1.Straight-line method for 2020. 2.Sum-of-the-years'-digits method for 2021.…

Question 14 A ship has an insurable value of R5 000 000 but is insured for only R4 000 000. The ship is damaged during a storm at sea. Damage amounts to R500 000. The insurer will be liable for ... of the loss. 1 No payment will be made. 2 R500 000 3 R250 000 4 R400 000

Answer 2

Question

Chapter 16, Problem 16.10P

1.

To determine

Net Operating Loss Carryforward

The net operating loss is considered as negative taxable income. When the tax-deductible expenses exceed the taxable revenues, the net operating loss is carry forwarded as it helps in getting deductions in future taxable amount.

Net Operating Loss Carryback

The net operating loss is considered as negative taxable income. It can be used in other fiscal year to offset the taxable income. The net operating loss carry back helps the companies to get reduction in the taxes from the past profitable years, in the form of tax refund, for the tax paid on the profit earned on those years.

Temporary Difference

Temporary difference refers to the difference of one income recognized by the tax rules and accounting rules of a company in different periods. Consequently, the difference between the amount of assets and liabilities reported in the financial reports and the amount of assets and liabilities as per the company’s tax records, is known as temporary difference.

Multiple Temporary Difference

It is very unlikely to have a single temporary difference in any company. In that case, the same concept of temporary difference will be applicable for multiple temporary difference. In case of multiple temporary difference, we have to categorize all temporary difference into future taxable amount and future deductible amounts. The total amount of future taxable amounts multiplied by future tax rate will generate deferred tax liability and total amount of future deductible amount multiplied by future tax rate will generate deferred tax asset.

To prepare: The journal entry to recognize the income tax benefit of the net operating loss in 2018 through carryback option.

2.

To determine

To show: The lower portion of the 2018 income statement that reports the income tax benefit of the net operating loss.

3.

To determine

To prepare: The journal entry to record the income taxes in 2019 assuming pre-tax accounting income is $60 million.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 16, Problem 16.10P

1.

To determine

Net Operating Loss Carryforward

The net operating loss is considered as negative taxable income. When the tax-deductible expenses exceed the taxable revenues, the net operating loss is carry forwarded as it helps in getting deductions in future taxable amount.

Net Operating Loss Carryback

The net operating loss is considered as negative taxable income. It can be used in other fiscal year to offset the taxable income. The net operating loss carry back helps the companies to get reduction in the taxes from the past profitable years, in the form of tax refund, for the tax paid on the profit earned on those years.

Temporary Difference

Temporary difference refers to the difference of one income recognized by the tax rules and accounting rules of a company in different periods. Consequently, the difference between the amount of assets and liabilities reported in the financial reports and the amount of assets and liabilities as per the company’s tax records, is known as temporary difference.

Multiple Temporary Difference

It is very unlikely to have a single temporary difference in any company. In that case, the same concept of temporary difference will be applicable for multiple temporary difference. In case of multiple temporary difference, we have to categorize all temporary difference into future taxable amount and future deductible amounts. The total amount of future taxable amounts multiplied by future tax rate will generate deferred tax liability and total amount of future deductible amount multiplied by future tax rate will generate deferred tax asset.

To prepare: The journal entry to recognize the income tax benefit of the net operating loss in 2018 through carryback option.

2.

To determine

To show: The lower portion of the 2018 income statement that reports the income tax benefit of the net operating loss.

3.

To determine

To prepare: The journal entry to record the income taxes in 2019 assuming pre-tax accounting income is $60 million.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 16, Problem 16.10P

1.

To determine

Net Operating Loss Carryforward

The net operating loss is considered as negative taxable income. When the tax-deductible expenses exceed the taxable revenues, the net operating loss is carry forwarded as it helps in getting deductions in future taxable amount.

Net Operating Loss Carryback

The net operating loss is considered as negative taxable income. It can be used in other fiscal year to offset the taxable income. The net operating loss carry back helps the companies to get reduction in the taxes from the past profitable years, in the form of tax refund, for the tax paid on the profit earned on those years.

Temporary Difference

Temporary difference refers to the difference of one income recognized by the tax rules and accounting rules of a company in different periods. Consequently, the difference between the amount of assets and liabilities reported in the financial reports and the amount of assets and liabilities as per the company’s tax records, is known as temporary difference.

Multiple Temporary Difference

It is very unlikely to have a single temporary difference in any company. In that case, the same concept of temporary difference will be applicable for multiple temporary difference. In case of multiple temporary difference, we have to categorize all temporary difference into future taxable amount and future deductible amounts. The total amount of future taxable amounts multiplied by future tax rate will generate deferred tax liability and total amount of future deductible amount multiplied by future tax rate will generate deferred tax asset.

To prepare: The journal entry to recognize the income tax benefit of the net operating loss in 2018 through carryback option.

2.

To determine

To show: The lower portion of the 2018 income statement that reports the income tax benefit of the net operating loss.

3.

To determine

To prepare: The journal entry to record the income taxes in 2019 assuming pre-tax accounting income is $60 million.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 16, Problem 16.10P

1.

To determine

Net Operating Loss Carryforward

The net operating loss is considered as negative taxable income. When the tax-deductible expenses exceed the taxable revenues, the net operating loss is carry forwarded as it helps in getting deductions in future taxable amount.

Net Operating Loss Carryback

The net operating loss is considered as negative taxable income. It can be used in other fiscal year to offset the taxable income. The net operating loss carry back helps the companies to get reduction in the taxes from the past profitable years, in the form of tax refund, for the tax paid on the profit earned on those years.

Temporary Difference

Temporary difference refers to the difference of one income recognized by the tax rules and accounting rules of a company in different periods. Consequently, the difference between the amount of assets and liabilities reported in the financial reports and the amount of assets and liabilities as per the company’s tax records, is known as temporary difference.

Multiple Temporary Difference

It is very unlikely to have a single temporary difference in any company. In that case, the same concept of temporary difference will be applicable for multiple temporary difference. In case of multiple temporary difference, we have to categorize all temporary difference into future taxable amount and future deductible amounts. The total amount of future taxable amounts multiplied by future tax rate will generate deferred tax liability and total amount of future deductible amount multiplied by future tax rate will generate deferred tax asset.

To prepare: The journal entry to recognize the income tax benefit of the net operating loss in 2018 through carryback option.

2.

To determine

To show: The lower portion of the 2018 income statement that reports the income tax benefit of the net operating loss.

3.

To determine

To prepare: The journal entry to record the income taxes in 2019 assuming pre-tax accounting income is $60 million.

Answer 6

Chapter 16, Problem 16.10P

1.

To determine

Net Operating Loss Carryforward

The net operating loss is considered as negative taxable income. When the tax-deductible expenses exceed the taxable revenues, the net operating loss is carry forwarded as it helps in getting deductions in future taxable amount.

Net Operating Loss Carryback

The net operating loss is considered as negative taxable income. It can be used in other fiscal year to offset the taxable income. The net operating loss carry back helps the companies to get reduction in the taxes from the past profitable years, in the form of tax refund, for the tax paid on the profit earned on those years.

Temporary Difference

Temporary difference refers to the difference of one income recognized by the tax rules and accounting rules of a company in different periods. Consequently, the difference between the amount of assets and liabilities reported in the financial reports and the amount of assets and liabilities as per the company’s tax records, is known as temporary difference.

Multiple Temporary Difference

It is very unlikely to have a single temporary difference in any company. In that case, the same concept of temporary difference will be applicable for multiple temporary difference. In case of multiple temporary difference, we have to categorize all temporary difference into future taxable amount and future deductible amounts. The total amount of future taxable amounts multiplied by future tax rate will generate deferred tax liability and total amount of future deductible amount multiplied by future tax rate will generate deferred tax asset.

To prepare: The journal entry to recognize the income tax benefit of the net operating loss in 2018 through carryback option.

Answer 7

Chapter 16, Problem 16.10P

1.

To determine

Net Operating Loss Carryforward

The net operating loss is considered as negative taxable income. When the tax-deductible expenses exceed the taxable revenues, the net operating loss is carry forwarded as it helps in getting deductions in future taxable amount.

Net Operating Loss Carryback

The net operating loss is considered as negative taxable income. It can be used in other fiscal year to offset the taxable income. The net operating loss carry back helps the companies to get reduction in the taxes from the past profitable years, in the form of tax refund, for the tax paid on the profit earned on those years.

Temporary Difference

Temporary difference refers to the difference of one income recognized by the tax rules and accounting rules of a company in different periods. Consequently, the difference between the amount of assets and liabilities reported in the financial reports and the amount of assets and liabilities as per the company’s tax records, is known as temporary difference.

Multiple Temporary Difference

It is very unlikely to have a single temporary difference in any company. In that case, the same concept of temporary difference will be applicable for multiple temporary difference. In case of multiple temporary difference, we have to categorize all temporary difference into future taxable amount and future deductible amounts. The total amount of future taxable amounts multiplied by future tax rate will generate deferred tax liability and total amount of future deductible amount multiplied by future tax rate will generate deferred tax asset.

To prepare: The journal entry to recognize the income tax benefit of the net operating loss in 2018 through carryback option.

Answer 8

2.

To determine

To show: The lower portion of the 2018 income statement that reports the income tax benefit of the net operating loss.

Answer 9

2.

To determine

To show: The lower portion of the 2018 income statement that reports the income tax benefit of the net operating loss.

Answer 10

3.

To determine

To prepare: The journal entry to record the income taxes in 2019 assuming pre-tax accounting income is $60 million.

Answer 11

3.

To determine

To prepare: The journal entry to record the income taxes in 2019 assuming pre-tax accounting income is $60 million.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 15

Ch. 16 - Prob. 16.1Q Ch. 16 - A deferred tax liability (or asset) is described...Ch. 16 - Prob. 16.3Q Ch. 16 - Prob. 16.4Q Ch. 16 - Temporary differences result in future taxable or...Ch. 16 - Identify three examples of differences with no...Ch. 16 - The income tax rate for Hudson Refinery has been...Ch. 16 - Suppose a tax reform bill is enacted that causes...Ch. 16 - A net operating loss occurs when tax-deductible...Ch. 16 - Prob. 16.10Q

To show: The lower portion of the 2018 income statement that reports the income tax benefit of the net operating loss.

To prepare: The journal entry to record the income taxes in 2019 assuming pre-tax accounting income is $60 million.

Want to see the full answer?

Chapter 16 Solutions