This is from the
Intermediate Accounting book 9th edition by authors :Spiceland,
Nelson, Thomas. It is E-16-20. If the taxable loss is allowed to be
carried forward, then how come it shows a loss in the 2018 income
statement? Shouldn't it just reflect in future income
statements?
Homework Answers
Okay, so I am answering the question which is typed by you and understanding your doubt by this statement you made.
Firstly, We need to understand one thing that every business has two sets of accounting books, one for business use and one for tax purpose.
Books for tax purpose are required to be tax laws complaint.
This is required because Income tax laws and accounting laws could differ significantly in some cases.
lets take a example to understand it better.
A business has loss of $100. Income tax laws in that country allows loss to be carry forwarded for next 4 years.
Firstly, in personal books of business there is no need to record this loss in balance sheet.
BUT in books for taxation purpose, we shall carry forward this loss and show the remaining amount in balance sheet as asset. Why? because this loss would help us to pay NO OR LOWER TAXES for next 4 years.
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This is from the
Intermediate Accounting book 9th edition by authors :Spiceland,
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This is from Intermediate Accounting by authors: Spiceland,
Nelson, and Thomas. Ch.18 P-2 question #1-b.) I understand how the
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This is problem P-18-1 in the Intermediate Accounting 2 book from authors Spiceland, Nelson, and Thomas....
This is problem P-18-1 in the Intermediate Accounting 2 book
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agency for violation of a federal law and paid in 2021, and b.) an
estimated loss of $12 million from accruing a loss contingency. The
loss will be tax deductible when paid in 2022. The enacted tax rate
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Wynn Sheet Metal reported a net operating loss of $138,000 for financial reporting and tax purposes...
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This is chapter 16 E-11 of Intermediate Accounting 2 by the
authors Spiceland, Nelson, and Thomas.
If deferred asset is normally a credit balance when
it is decreased from 30,000,000 to 28,000,000 wouldn't it be
debited in the above journal entry instead of
credited?
At the end of 2017, Payne Industries had a deferred tax asset account with a balance of $30 million attributable to a temporary book-tax difference of $75 million in a liability for estimated expenses. At the...
During 2018, its first year of operations, Baginski Steel Corporation reported a net operating loss of $460,000 for financial reporting and tax purposes. The enacted tax rate is 30%. Required: 1. Prepare the journal entry to recognize the income tax benefit of the net operating loss. Assume the weight of available evidence suggests future taxable income sufficient to benefit from future deductible amounts from the net operating loss carryforward. 2. Show the lower portion of the 2018 income statement that...
During 2021, its first year of operations, Baginski Steel Corporation reported a net operating loss of $384,000 for financial reporting and tax purposes. The enacted tax rate is 25%. Required: 1. Prepare the journal entry to recognize the income tax benefit of the net operating loss. Assume the weight of available evidence suggests that future taxable income will be sufficient to benefit from future deductible amounts arising from the net operating loss carryforward. 2. Show the lower portion of the...
This is from Intermediate Accounting by authors: Spiceland,
Nelson, and Thomas. Ch.18 P-2 question #1-b.) I understand how the
cash should be debited for 24,000,000 but shouldn't Paid-In-Capital
be $1680/$240= $7 excess of Par value just like in
question # 1-a.) of this problem? $7 *2 million shares sold
= $14,000,000 Paid-In-Capital-Excess of Par; Common Stock
of 2,000,000 and Retained Earnings of 8,000,000 in order to equal
out the 24,000,000 that cash is debited by? Please explain in
detail.
The...
Wynn Sheet Metal reported an operating loss of $164,000 for financial reporting and tax purposes in 2018. The enacted tax rate is 40%. Taxable income, tax rates, and income taxes paid in Wynn's first four years of operation were as follows: Taxable Income $62,000 72,000 82,000 62,000 Tax Rates 30% 30 Income Taxes Paid $18,600 21,600 32,800 27,900 2014 2015 2016 2017 40 45 Required: 1. Complete the following table given below and prepare the joural entry to recognize the...
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