Recording Net Operating Loss Carryback During Year 4, Lamb Inc. suffered a tax loss of $-100,000. Lamb qualifies for a two-year loss carryback option for tax purposes, using the earliest year first and with no income restrictions. Taxable income for the last three years (listed in chronological order) follows: Year 1: $90,000; Year 2: $80,000; and Year 3: $30,000. The tax rate is 40% for Year 3 and Year 4, and 25% for Year 1 and Year 2. Prepare Lamb's entry for the loss carryback on December 31 of Year 4. Account Name Dr. Date ec. 31, Year 4 Deferred Tax Asset Income Tax Expense To record net operating loss carryback 25,000 0 Cr. 0x 25,000 *
Recording Net Operating Loss Carryback During Year 4, Lamb Inc. suffered a tax loss of $-100,000. Lamb qualifies for a two-year loss carryback option for tax purposes, using the earliest year first and with no income restrictions. Taxable income for the last three years (listed in chronological order) follows: Year 1: $90,000; Year 2: $80,000; and Year 3: $30,000. The tax rate is 40% for Year 3 and Year 4, and 25% for Year 1 and Year 2. Prepare Lamb's entry for the loss carryback on December 31 of Year 4. Account Name Dr. Date ec. 31, Year 4 Deferred Tax Asset Income Tax Expense To record net operating loss carryback 25,000 0 Cr. 0x 25,000 *
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Recording Net Operating Loss Carryback
During Year 4, Lamb Inc. suffered a tax loss of $-100,000. Lamb qualifies for a
two-year loss carryback option for tax purposes, using the earliest year first and
with no income restrictions. Taxable income for the last three years (listed in
chronological order) follows: Year 1: $90,000; Year 2: $80,000; and Year 3: $30,000.
The tax rate is 40% for Year 3 and Year 4, and 25% for Year 1 and Year 2. Prepare
Lamb's entry for the loss carryback on December 31 of Year 4.
Account Name
Dr.
Date
ec. 31, Year 4 Deferred Tax Asset
Income Tax Expense
To record net operating loss carryback
25,000
0
Cr.
0x
25,000 *
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