In 2020 to 2022, respectively, Boshville Company earned taxable income of $400,000, $1,000,000, and $600,000 and paid income tax of $120,000, $220,000, and $180,000. It is now the end of 2023, and the company incurs a loss of $3,000,000 for tax purposes and earns an accounting loss before tax of $2,500,000. The difference between accounting and taxable income is due to capital cost allowance exceeding depreciation expense. The tax rate is currently 45%. Boshville anticipates using only 60% of the losses carried forward within the allowable carryforward period. Required Record the journal entries for income tax expense and income tax payable or receivable for 2023. Use a valuation account for the unrecognized portion of losses carried forward.
In 2020 to 2022, respectively, Boshville Company earned taxable income of $400,000, $1,000,000, and $600,000 and paid income tax of $120,000, $220,000, and $180,000. It is now the end of 2023, and the company incurs a loss of $3,000,000 for tax purposes and earns an accounting loss before tax of $2,500,000. The difference between accounting and taxable income is due to capital cost allowance exceeding depreciation expense. The tax rate is currently 45%. Boshville anticipates using only 60% of the losses carried forward within the allowable carryforward period. Required Record the journal entries for income tax expense and income tax payable or receivable for 2023. Use a valuation account for the unrecognized portion of losses carried forward.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 12P: Comprehensive Colt Company reports pretax financial income of 143,000 in 2019. In addition to pretax...
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![In 2020 to 2022, respectively, Boshville Company earned taxable income of $400,000, $1,000,000, and $600,000 and
paid income tax of $120,000, $220,000, and $180,000. It is now the end of 2023, and the company incurs a loss of
$3,000,000 for tax purposes and earns an accounting loss before tax of $2,500,000. The difference between accounting
and taxable income is due to capital cost allowance exceeding depreciation expense. The tax rate is currently 45%.
Boshville anticipates using only 60% of the losses carried forward within the allowable carryforward period.
Required
Record the journal entries for income tax expense and income tax payable or receivable for 2023. Use a valuation
account for the unrecognized portion of losses carried forward.
Next, prepare the entry to record the deferred tax liability on the temporary difference.
Accounts
Debit
Credit
Finally, prepare the entry related to the unrecognized portion of the loss carryforward.
Accounts
Debit
Credit](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fab78be3d-8877-49c6-ad77-a6ffd2f3a5cd%2F5dfc6619-6240-4b2f-b836-fa83b669ad53%2Fnus6x9z_processed.jpeg&w=3840&q=75)
Transcribed Image Text:In 2020 to 2022, respectively, Boshville Company earned taxable income of $400,000, $1,000,000, and $600,000 and
paid income tax of $120,000, $220,000, and $180,000. It is now the end of 2023, and the company incurs a loss of
$3,000,000 for tax purposes and earns an accounting loss before tax of $2,500,000. The difference between accounting
and taxable income is due to capital cost allowance exceeding depreciation expense. The tax rate is currently 45%.
Boshville anticipates using only 60% of the losses carried forward within the allowable carryforward period.
Required
Record the journal entries for income tax expense and income tax payable or receivable for 2023. Use a valuation
account for the unrecognized portion of losses carried forward.
Next, prepare the entry to record the deferred tax liability on the temporary difference.
Accounts
Debit
Credit
Finally, prepare the entry related to the unrecognized portion of the loss carryforward.
Accounts
Debit
Credit
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