Part a Angelini Corporation operates in an industry for which net operating loss (NOL) carrybacks are allowed In its first two years of operations Angelini reported the following operating income (loss) amounts 2019 $ 1,500,000 2020 (2,100,000 ) Angelini has no book vs tax differences in either year The enacted income tax rate is 40 for all years Angelini believes its financial losses in 2020 were attributable to the Coronavirus pandemic and that the company will return to profitability in 2021 and beyond Required Assume that Angelini elects the carryback option Show the entry entries Angelini should book in 2020 to account for its NOL Show the entry entries Angelini should book in 2021 if it has taxable income of $3,250,000 for that year Assume instead that Angelini opts to NOT carryback its NOLs Show the entry entries Angelini should book in 2020 to account for its NOL Show the entry entries Angelini should book in 2021 if it has taxable income of $3,250,000 for that year Part b Buy More, Inc sells a full assortment of computer parts, including motherboards, video cards, and cables It also offers computer assembly services A customer places an order for an advanced workstation, and Buy More asks for $3,700 If Buy More were to sell only the parts for the advanced workstation (that is, with no assembly service) the price would be $3,200 Required How many performance obligations are there in this arrangement If more than one performance obligation, how much of the contract price should be allocated to each performance obligation (Use the residual approach )

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Posted on Dec 05, 2020

Part a Angelini Corporation operates in an industry for which net operating loss (NOL) carrybacks are allowed. In its first two years of operations Angelini

Part a

Angelini Corporation operates in an industry for which net operating loss (NOL) carrybacks are allowed. In its first two years of operations Angelini reported the following operating income (loss) amounts:


2019	$	1,500,000
2020		(2,100,000	)

Angelini has no book vs. tax differences in either year. The enacted income tax rate is 40% for all years. Angelini believes its financial losses in 2020 were attributable to the Coronavirus pandemic and that the company will return to profitability in 2021 and beyond.

Required

Assume that Angelini elects the carryback option.
1. Show the entry/entries Angelini should book in 2020 to account for its NOL.
2. Show the entry/entries Angelini should book in 2021 if it has taxable income of $3,250,000 for that year.
Assume instead that Angelini opts to NOT carryback its NOLs.
1. Show the entry/entries Angelini should book in 2020 to account for its NOL.
2. Show the entry/entries Angelini should book in 2021 if it has taxable income of $3,250,000 for that year.

Part b

Buy More, Inc. sells a full assortment of computer parts, including motherboards, video cards, and cables. It also offers computer assembly services. A customer places an order for an advanced workstation, and Buy More asks for $3,700. If Buy More were to sell only the parts for the advanced workstation (that is, with no assembly service) the price would be $3,200.

Required

How many performance obligations are there in this arrangement?
If more than one performance obligation, how much of the contract price should be allocated to each performance obligation? (Use the residual approach.)