Syer Company reports net operating income (loss) for financial reporting and tax purposes in each year as follows: 2017 $ 100 2020 $ (600) 2016 $ 300 Syer's 2020 NOL is driven by an unfortunate obsolescence of its primary product. Given great uncertainty in Syer's future profitability, Syer's management does not believe it is more likely than not that it will be able to realize deferred tax assets in future years. Syer's federal tax rate decreased from 35% to 21% starting in 2018. Required: 1. Assume that Syer does not account for its NOL under the CARES Act. Instead, Syer accounts for its NOL using the general requirement that NOLS be carried forward. Prepare the appropriate journal entry to record Syer's 2020 income taxes, and indicate Syer's 2020 net income(loss). 2. Now assume that Syer does account for its NOL under the CARES Act. Prepare the appropriate journal entry to record Syer's 2020 income taxes, and indicate Syer's 2020 net income(loss). 2018 $0 Complete this question by entering your answers in the tabs below. Req 1A A No 2019 $0 Req 1B Transaction 1 Req 2A Prepare the appropriate journal entry to record Syer's 2020 income taxes. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Req 2B General Journal Income tax expense Deferred tax asset Receivable-Income tax refund **** Debit 35 x Credit 0 35 x
Syer Company reports net operating income (loss) for financial reporting and tax purposes in each year as follows: 2017 $ 100 2020 $ (600) 2016 $ 300 Syer's 2020 NOL is driven by an unfortunate obsolescence of its primary product. Given great uncertainty in Syer's future profitability, Syer's management does not believe it is more likely than not that it will be able to realize deferred tax assets in future years. Syer's federal tax rate decreased from 35% to 21% starting in 2018. Required: 1. Assume that Syer does not account for its NOL under the CARES Act. Instead, Syer accounts for its NOL using the general requirement that NOLS be carried forward. Prepare the appropriate journal entry to record Syer's 2020 income taxes, and indicate Syer's 2020 net income(loss). 2. Now assume that Syer does account for its NOL under the CARES Act. Prepare the appropriate journal entry to record Syer's 2020 income taxes, and indicate Syer's 2020 net income(loss). 2018 $0 Complete this question by entering your answers in the tabs below. Req 1A A No 2019 $0 Req 1B Transaction 1 Req 2A Prepare the appropriate journal entry to record Syer's 2020 income taxes. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Req 2B General Journal Income tax expense Deferred tax asset Receivable-Income tax refund **** Debit 35 x Credit 0 35 x
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Syer Company reports net operating income (loss) for financial reporting and tax purposes in each year as follows:
2017
$ 100
2016
$ 300
Syer's 2020 NOL is driven by an unfortunate obsolescence of its primary product. Given great uncertainty in Syer's future profitability,
Syer's management does not believe it is more likely than not that it will be able to realize deferred tax assets in future years. Syer's
federal tax rate decreased from 35% to 21% starting in 2018.
Required:
1. Assume that Syer does not account for its NOL under the CARES Act. Instead, Syer accounts for its NOL using the general
requirement that NOLS be carried forward. Prepare the appropriate journal entry to record Syer's 2020 income taxes, and
indicate Syer's 2020 net income(loss).
2. Now assume that Syer does account for its NOL under the CARES Act. Prepare the appropriate journal entry to record Syer's
2020 income taxes, and indicate Syer's 2020 net income(loss).
Req 1A
A
2018
$0
Complete this question by entering your answers in the tabs below.
No
Req 1B
2019
$0
Transaction
1
2020
$ (600)
Req 2A
Prepare the appropriate journal entry to record Syer's 2020 income taxes.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Income tax
Req 2B
General Journal
Deferred tax asset
Receivable-Income tax refund
< Req 1B
Req 2B >
X
X
Debit
35
Credit
0
35 x
X
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