NOLs_solution - ($10,000 x 15%) 2009 Income tax refund...

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Net operating losses (NOLs) – SOLUTION The Nunan Company reported the following income for financial accounting and tax purposes for 2005-2010: Year Income <loss> Enacted rate 2005 12,000 15% 2006 20,000 15% 2007 35,000 20% 2008 (10,000) 20% 2009 (75,000) 25% 2010 70,000 30% Required: Determine the benefit from the NOL that Nunan would report on their income statement (accounts and numbers in bold ) and balance sheet (accounts and numbers in italics ) for 2008-2010. 2008 Income tax refund receivable 1,500 Income tax benefit of NOL CB 1,500
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Unformatted text preview: ($10,000 x 15%) 2009 Income tax refund receivable 7,000 Income tax benefit of NOL CB 7,000 ($35,000 x 20%) Deferred tax asset 12,000 Income tax benefit of NOL CF 12,000 (40,000 x 30%) 2010 Income tax expense 21,000 Deferred tax asset 12,000 Income tax payable 9,000 ($70,000 $40,000 NOL CF) x 30% Income statement 2008 2009 2010 Pretax income (loss) (10,000) (75,000) 70,000 Add: Income tax benefit NOL CB 1,500 7,000 Add: Income tax benefit NOL CF 12,000 Deduct: Income tax expense (21,000) Net income (loss) (8,500) (56,000) 49,000...
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