Part 1: In 2017, its first year of operations, rate is 30%. In 2018, Kimble has $360,000 taxable income and the tax rate remains Instructions Ass Kimble Corp. has a $900,000 net operating loss when the tax 30%. ume the management of Kimble Corp. thinks that it is more likely than not that the loss carryforward will not t be realized in the near future because it is a new company (this is before results of 2018 operations are known). (a) What are the entries in 2017 to record the tax loss carryforward? (b) Prepare the entries in 2018 to record the current and deferred income taxes and to recognize the loss carryforward? Kimble believes it will have future net incomes sufficient to absorb the remaining tax loss carryforward, and also assumes that future tax rates will be 24%. Part 2: The following differences enter into the reconciliation of financial income and taxable income of Abbott Company for the year ended December 31, 2010, its first year of operations. The enacted income tax rate is 30% for all years. Pretax accounting income Excess tax depreciation (temporary difference) Litigation accrual (temporary difference) Unearned rent revenue deferred on the books but appropriately $700,000 (320,000) 70,000 recognized in taxable income (temporary difference) Interest income from New York municipal bonds (permanent difference) Taxable income 50,000 (20,000) $480,000 1. Excess tax depreciation will reverse equally over a four-year period, 2011-2014. 2. It is estimated that the litigation liability will be paid in 2014. 3. Rent revenue will be recognized during the last year of the lease, 2014. 4. Interest revenue from the New York bonds is expected to be $20,000 each year until their maturity at the end of 2014. Instructions (a) Prepare a schedule of future taxable and (deductible) amounts. (b) Prepare the journal entry to record income tax expense, deferred taxes, and the income taxes payable for 2010. Show computations clearly and explain your answer. Credit will not be given unless sufficient computations are shown