Question
E19-23 : Sondgeroth Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes (assume the carryback provision is used first).
E19-23: Sondgeroth Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes (assume the carryback provision is used first).
Year | Pretax Income (loss) | Tax Rate |
2012 | $120,000 | 34% |
2013 | $90,000 | 34% |
2014 | $(280,000) | 38% |
2015 | $220,000 | 38% |
The tax rates listed were all enacted by the beginning of 2012.
1. Prepare the journal entries for the years 2012-2015 to record income tax expense (benefit), income taxes payable (refundable), and the tax effects of the loss carryback and carryforward, assuming that at the end of 2014 the benefits of the loss carryforward are judged more likely than not to be realized in the future.
2.Prepare the journal entries for 2014 and 2015, assuming that based on the weight of available evidence, it is more likely than not that one-fourth of the benefits of the loss carryforward will not be realized.
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