Chapter 19, Problem 8ICA

To determine

Loss carryback: The process of utilizing the previous-year profit to compensate the losses incurred during the current year is termed as loss carryback. The immediate previous year should be considered first for compensating the loss. The company can also claim the loss as their refund of tax paid.

Loss carry forward: The process of utilizing the next-year or future-year profits to compensate the loss of the current year is termed as loss carry forward. The viability of the same is not certain because the company may incur a loss also in future.

To record: To record the benefits of loss carry forward and loss carry back.