On 1 January 20X4, Dart Incorporated commenced business operations. The following information is available to you: 20X7 $120,000 Earnings (loss) before tax Tax rate (enacted in each year) Depreciation (original cost of assets, $1,000,000) Capital cost allowance Rental revenue recognized* 20X4 $90,000 36% 50,000 60,000 60,000 20X6 20X5 $(410,000) $100,000 36% 50,000 0 32% 50,000 120,000 30% 50,000 110,000
On 1 January 20X4, Dart Incorporated commenced business operations. The following information is available to you: 20X7 $120,000 Earnings (loss) before tax Tax rate (enacted in each year) Depreciation (original cost of assets, $1,000,000) Capital cost allowance Rental revenue recognized* 20X4 $90,000 36% 50,000 60,000 60,000 20X6 20X5 $(410,000) $100,000 36% 50,000 0 32% 50,000 120,000 30% 50,000 110,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A17-20 Loss Carryback/Carryforward; Temporary Differences; Rate Change (LO 17-2, 17-3, 17-4, 17-6)
On 1 January 20X4, Dart Incorporated commenced business operations. The following information is available to you:
20X4
$90,000
Earnings (loss) before tax
Tax rate (enacted in each year)
Depreciation (original cost of assets, $1,000,000)
Capital cost allowance
Rental revenue recognized*
View transaction list
Journal entry worksheet
1
2
3
4
5
36%
50,000
60,000
60,000
6
*There is a rent receivable account at the end of 20X4, because rent revenue was earned in 20X4 but will not be collected until 20X6.
This amount is not part of taxable incon In 20X4, but will be taxable income in 20X6 when it is collected.
20X5
$(410,000)
Required:
Prepare Journal entries to record tax for 20X4, 20X5, 20X6, and 20X7. Assume that the tax loss carryforward usage in 20X5 is
considered to be not probable but that in 20X6 the balance of probability shifts and in 20X6 the loss usage is considered to be
probable. (If no entry is required for a transaction/event, select "No Journal entry required" in the first account field.)
Record entry for set-off of current income tax expense payable against loss
carryforward.
36%
50,000
0
20X6
$100,000
32%
50,000
120,000
20X7
$120,000
30%
50,000
110,000
4
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