Question 6 In 2021, its first year of operations, Wildhorse Corp. has a $770,000 net operating loss when the tax rate is 35%. In 2022, Wildhorse has $330,000 taxable income and the tax rate remains 35%. Assume the management of Wildhorse Corp. thinks that it is more likely than not that the loss carryforward will not be realized in the near future because it is a new company (this is before results of 2022 operations are known). What are the entries in 2021 to record the tax effects of the loss carryforward? (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit (To recognize benefit of loss carryforward) (To record allowance amount) What entries would be made in 2022 to record the current and deferred income taxes and to recognize the loss carryforward? (Assume that at the end of 2022 it is more likely than not that the deferred tax asset will be realized.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation (To record current and deferred income taxes) (To eliminate allowance and recognize loss carryforward) Credit Debit Credit
Question 6 In 2021, its first year of operations, Wildhorse Corp. has a $770,000 net operating loss when the tax rate is 35%. In 2022, Wildhorse has $330,000 taxable income and the tax rate remains 35%. Assume the management of Wildhorse Corp. thinks that it is more likely than not that the loss carryforward will not be realized in the near future because it is a new company (this is before results of 2022 operations are known). What are the entries in 2021 to record the tax effects of the loss carryforward? (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit (To recognize benefit of loss carryforward) (To record allowance amount) What entries would be made in 2022 to record the current and deferred income taxes and to recognize the loss carryforward? (Assume that at the end of 2022 it is more likely than not that the deferred tax asset will be realized.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation (To record current and deferred income taxes) (To eliminate allowance and recognize loss carryforward) Credit Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question 6
In 2021, its first year of operations, Wildhorse Corp. has a $770,000 net operating loss when the tax rate is 35%. In 2022, Wildhorse has $330,000 taxable income and the tax rate remains 35%.
Assume the management of Wildhorse Corp. thinks that it is more likely than not that the loss carryforward will not be realized in the near future because it is a new company (this is before results of 2022
operations are known).
What are the entries in 2021 to record the tax effects of the loss carryforward? (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is
required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation
(To recognize benefit of loss carryforward)
(To record allowance amount)
Debit
(To record current and deferred income taxes)
What entries would be made in 2022 to record the current and deferred income taxes and to recognize the loss carryforward? (Assume that at the end of 2022 it is more likely than not that the deferred tax asset
will be realized.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0
for the amounts.)
Account Titles and Explanation
(To eliminate allowance and recognize loss carryforward)
Credit
Debit
Credit
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