Capa Solo Inc. follows IFRS and reported the following taxable incomes/losses and tax rates for the first five years ended December 31:

General Information

2016: Taxable income (loss) = $50,000 Tax rate = 25%

2017: Taxable income (loss) = (400,000) Tax rate = 40%

2018: Taxable income (loss) = $100,000 Tax rate = 34%

2019: Taxable income (loss) = $230,000 Tax rate = 34%

2020: Taxable income (loss) = $620,000 Tax rate = 42%

Capa Solo Inc. had decided to always first carryback losses in any given year before carrying them forward. All tax rate changes were enacted as of the beginning of the year and these rates were not known until the year of change.

Required:

1) Now assume that it was expected in 2017 that only 60% of the losses determined as per assumptions in (1) above, could be used within the carryforward period. Prepare the journal entry required to be made on December 31, 2017 to record this situation.