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n 20X6, CICO has unrecognized tax losses of $500, 000. In 20X7, the company has additional losses of $100, 000. However, the assessment is that $250, 000 of losses will probably be realized in the future. The current tax rate is 30% and the enacted rate of 20X8 is 28%. What is the entry required in 20X7. Multiple Choice a) Dr. Deferred tax asset $30, 000; Cr. Income tax expense (recovery) $30, 000 b) Dr. Deferred tax asset $70, 000; Cr. Income tax expense (recovery) $70, 000 c) Dr. Deferred tax asset $77, 000; Cr. Income tax expense (recovery) $77, 000 d) Dr. Deferred tax asset $70, 000; Cr. Retained earnings $70, 000

n 20X6, CICO has unrecognized tax losses of $500, 000. In 20X7, the company has additional losses of $100, 000. However, the assessment is that $250, 000 of losses will probably be realized in the future. The current tax rate is 30% and the enacted rate of 20X8 is 28%. What is the entry required in 20X7. Multiple Choice a) Dr. Deferred tax asset $30, 000; Cr. Income tax expense (recovery) $30, 000 b) Dr. Deferred tax asset $70, 000; Cr. Income tax expense (recovery) $70, 000 c) Dr. Deferred tax asset $77, 000; Cr. Income tax expense (recovery) $77, 000 d) Dr. Deferred tax asset $70, 000; Cr. Retained earnings $70, 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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n 20X6, CICO has unrecognized tax losses of $500, 000. In 20X7, the company has additional losses of $100, 000. However, the assessment is that $250, 000 of losses will probably be realized in the future. The current tax rate is 30% and the enacted rate of 20X8 is 28%. What is the entry required in 20X7.

Multiple Choice

a) Dr. Deferred tax asset $30, 000; Cr. Income tax expense (recovery) $30, 000

b) Dr. Deferred tax asset $70, 000; Cr. Income tax expense (recovery) $70, 000

c) Dr. Deferred tax asset $77, 000; Cr. Income tax expense (recovery) $77, 000

d) Dr. Deferred tax asset $70, 000; Cr. Retained earnings $70, 000

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