Answered step by step
Verified Expert Solution
Question
1 Approved Answer
15. Lowrider Inc. has reported taxable income every year since it began operations in 2017. In 2020, the company reported a tax loss of $500,000
15. Lowrider Inc. has reported taxable income every year since it began operations in 2017. In 2020, the company reported a tax loss of $500,000 due to Covid 19. During the previous 2 years, Lowrider paid federal income taxes of $28,000 in 2018 $35,000 in 2019 Lowrider has applied the carryback rules and has filed for a refund of income taxes paid in 2018 and 2019, and the Company expects to return to profitability in 2021 and beyond. At December 31, 2021, the Company fully expects to use its tax loss carryforward. Assume that, at January 1, 2021, Lowrider did not have either a deferred tax asset or a deferred tax liability. The income tax rate is 21%. For the year ended December 31, 2021, Lowrider should report a net loss of A. $437,000. B. $395,000. C. $458,000 D. $416,000 16. Refer to the information in the previous question. Which of the following statements is correct for Lowrider's balance sheet at December 31, 20212 A. There is an income tax refund receivable reported under current assets for $63,000. B. A deferred tax asset is reported under noncurrent assets for $42,000. C. A and B D. Neither A nor B. 17. Which of the following statements is correct? A. Reporting an allowance for a deferred tax asset requires a high probability that the benefit of the deferred tax asset will not be realized. B. Having significant operating loss carry forwards that may not offset future taxable income due to low future taxable income projections is a reason for establishing an allowance for a deferred tax asset. C. A and B. D. Neither A nor B
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started