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Mortel Industries, Ltd., follows IFRS and reported the following taxable incomes/losses and tax rates for the first five years ended December 31: GENERAL INFORMATION: Taxable
Mortel Industries, Ltd., follows IFRS and reported the following taxable incomes/losses and tax rates for the first five years ended December 31:
GENERAL INFORMATION:
Taxable income (loss):
2016: $ 50,000
2017: (400,000)
2018: 100,000
2019: 230,000
2020: 620,000
Tax rate:
2016: 25%
2017: 40%
2018: 34%
2019: 34%
2020: 42%
Mortel 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:
- Prepare the journal entry/entries on December 31, 2017 to record only the loss carryback and/or loss carryforward for the loss in 2017. Assume there are no uncertainties about the realization of the net loss reported at December 31, 2017 and that it was more likely than not for it to generate profits in the years following any loss.
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