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Babcock Company just completed its first year of operations and has a net operating loss for tax purposes of $100,000. Babcock expects to be profitable within the next two years. The enacted tax rate is 40%. Which of the following components are included in the journal entry to record the NOL carryforward? (Choose all that apply) A. credit taxes payable $40,000 OB. debit income tax expense $40,000 OC. credit income tax expense $40,000 D. debit deferred tax asset $40,000 E. credit deferred tax liability $40,000

Babcock Company just completed its first year of operations and has a net operating loss for tax purposes of $100,000. Babcock expects to be profitable within the next two years. The enacted tax rate is 40%. Which of the following components are included in the journal entry to record the NOL carryforward? (Choose all that apply) A. credit taxes payable $40,000 OB. debit income tax expense $40,000 OC. credit income tax expense $40,000 D. debit deferred tax asset $40,000 E. credit deferred tax liability $40,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Babcock Company just completed its first year of operations and has a net operating loss for tax purposes of $100,000. Babcock expects to be profitable within the next two years. The enacted tax rate is 40%. Which of the following components are included in the journal entry to record the NOL carryforward? (Choose all that apply) A. credit taxes payable $40,000 OB. debit income tax expense $40,000 OC. credit income tax expense $40,000 D. debit deferred tax asset $40,000 E. credit deferred tax liability $40,000
Transcribed Image Text:Babcock Company just completed its first year of operations and has a net operating loss for tax purposes of $100,000. Babcock expects to be profitable within the next two years. The enacted tax rate is 40%. Which of the following components are included in the journal entry to record the NOL carryforward? (Choose all that apply) A. credit taxes payable $40,000 OB. debit income tax expense $40,000 OC. credit income tax expense $40,000 D. debit deferred tax asset $40,000 E. credit deferred tax liability $40,000
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