For the year ended December 31, 2008, Colt Corporation had a loss carryforward of$ 180,000 available to offset future taxable income. At December 31, 2008, the company believes that realization of the tax benefit related to the loss carryforward is probable. The tax rate is 30%.
Required:
1. What amount of the tax benefit should be reported in Colt’s 2008 income statement?
2. What additional account(s) would be affected when the loss carryforward is recognized?