benefits of a loss carryforward, assume that it is probable that the related benefits will be realized. Instructions a. What entry or entries for income taxes should be recorded for 2018? b. Indicate what the income tax expense portion of the income statement for 2018 should look like. Assume all income (loss) relates to continuing operations. c. What entry for income taxes should be recorded in 2019?

benefits of a loss carryforward, assume that it is probable that the related benefits will be realized. Instructions a. What entry or entries for income taxes should be recorded for 2018? b. Indicate what the income tax expense portion of the income statement for 2018 should look like. Assume all income (loss) relates to continuing operations. c. What entry for income taxes should be recorded in 2019?

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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Question

Assume that the net operating loss can be carried back two years.

E19.22 (LO3) (Two NOLS, No Temporary Differences, Entries
and Income Statement) Lanier SA has pretax financial income (or loss)
equal to taxable income (or loss) from 2017–2023 as follows.
Income (Loss) Tax Rate
2017
€ 48,000
50%
2018 (150,000)
40%
2019
90,000
40%
2020
30,000
40%
2021
105,000
40%
2022
(60,000)
50%
2023
130,000
50%
Pretax financial income (loss) and taxable income (loss) have been the
same for all years since Lanier has been in business. In recording the
benefits of a loss carryforward, assume that it is probable that the related
benefits will be realized.
Instructions
a. What entry or entries for income taxes should be recorded for 2018?
b. Indicate what the income tax expense portion of the income statement
for 2018 should look like. Assume all income (loss) relates to
continuing operations.
c. What entry for income taxes should be recorded in 2019?
d. How should the income tax expense section of the income statement
for 2019 appear?
e. What entry for income taxes should be recorded in 2022?
f. How should the income tax expense section of the income statement
for 2022 appear?

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