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In 2018, its first year of operations, Kimble Corp. has a $930,000 net operating loss when the tax rate is 40%. In 2019, Kimble has
In 2018, its first year of operations, Kimble Corp. has a $930,000 net operating loss when the tax rate is 40%. In 2019, Kimble has $480,000 taxable income and the tax rate remains 40%. Assume the management of Kimble Corp. thinks that it is more likely than not that the loss carryforward will not be realized in the near future because it is a new company (this is before results of 2019 operations are known).
a.) What are the entries in 2018 to record the tax effects of the loss carryforward?
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