Petrilli Ltd. had a taxable loss of $3,600,000 in 20X8 and a further loss of $140,000 in 20X9. The tax rate in 20X8 was 32% and in 20X9, 33%. All rates are enacted in the year to which they pertain. In the three years before the losses, the company had the following taxable income and tax rates:
Petrilli Ltd. had a taxable loss of $3,600,000 in 20X8 and a further loss of $140,000 in 20X9. The tax rate in 20X8 was 32% and in 20X9, 33%. All rates are enacted in the year to which they pertain. In the three years before the losses, the company had the following taxable income and tax rates:
| 20X5 | 20X6 | 20X7 | |||||||
| Taxable income | $ | 1,267,200 | $ | 1,368,000 | $ | 488,400 | |||
| Tax rate | 36 | % | 38 | % | 40 | % | |||
There are no temporary differences other than those created by income tax losses. The company was struggling due to a competitor entering the market.
Assuming that loss carryforward usage is not probable in each year, prepare a
Record the entry in loss year 20X8 when the provision is not met.
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