FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Wynn Farms reported a net operating loss of $195,000 for financial reporting and tax purposes in 2021. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Wynn’s first four years of operation were as follows:
Taxable Income |
Tax Rates |
Income Taxes Paid |
|||||||
2017 | $ | 67,000 | 30 | % | $ | 20,100 | |||
2018 | 77,000 | 30 | 23,100 | ||||||
2019 | 115,000 | 40 | 46,000 | ||||||
2020 | 40,000 | 45 | 18,000 | ||||||
Required:
1. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses. Complete the table given below and prepare the
2. Show the lower portion of the 2021 income statement that reports the income tax benefit of the net operating loss.
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