LOSS+CARRYOVER+FOR+TAX+REPORTING+H-W+Solutiom

LOSS+CARRYOVER+FOR+TAX+REPORTING+H-W+Solutiom - L OSS...

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Unformatted text preview: L OSS CARRYOVER FOR TAX REPORT I NG Homework & Solution Given the information below: Year 6 Accounting Year 7 Year 8 Total 100,000 (215,000 150,000 35,000 ) I ncome Dep reciation 50,000 50,000 50,000 150,000 C CA 75,000 00 75,000 150,000 (165,000 125,000 35,000 0 Taxable I ncome* 75,000 ) T ax Rate 40% 30% 30% *Before loss carryover At the end of year 5, the carrying value of the depreciable asset(s) was $800,000, whereas, undepreciated capital cost was $500,000. The balance in the future tax liabili ty was $120,000. Assume 1 year carryback. R equi red: (1) Assuming future taxable income is more likely than not m ake journal entries for years 6 – 8. 2) Assuming future taxable income is not likely make journal entries for years 6 – 8. (1) LOSS CARRYOVER FOR TAX REPORT I NG Homework & Solution Requirement (1): Year 6 Current Tax Expense 30,000 Taxes Payable Future Tax Expense 30,000 10,000 F uture Tax Liability 10,000 Year 7 Taxes Receivable 30,000 Current Tax Benefit Future Tax Asset 30,000 19,500 Current Tax Benefit Future Tax Liability 19,500 47,500 F uture Tax Benefit 47,500 Year 8 Current Tax Expense 18,000 Taxes Payable Current Tax Expense F uture Tax Asset 18,000 19,500 19,500 (2) LOSS CARRYOVER FOR TAX REPORT I NG Homework & Solution Future Tax Expense 7,500 F uture Tax Liability 7,500 Requirement (2): Year 6 Current Tax Expense 30,000 Taxes Payable Future Tax Expense F uture Tax Liability Year 7 30,000 10,000 10,000 Taxes Receivable 30,000 Current Tax Benefit 30,000 Future Tax Liability 47,500 F uture Tax Benefit 47,500 (3) LOSS CARRYOVER FOR TAX REPORT I NG Homework & Solution Year 8 Current Tax Expense Taxes Payable 18,000 18,000 F uture Tax Expense 7,500 F uture Tax Liability 7,500 (4) ...
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This note was uploaded on 08/02/2011 for the course ACCT 352 taught by Professor Freeman during the Summer '11 term at Windsor.

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LOSS+CARRYOVER+FOR+TAX+REPORTING+H-W+Solutiom - L OSS...

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