Required:

1. Prepare journal entries to record tax for 20X7, 20X8, and 20X9. Assume that the loss carryforward usage in 20X8 is considered to be probable.

2. Prepare journal entries to record tax for 20X7, 20X8, and 20X9. Assume that the loss carryforward usage in 20X8 is not considered to be probable but is considered to be probable in 20X9.

A17-17 Loss Carryback/Carryforward; Temporary Differences; Rate Change: On 1 January 20X7, Chang Inc. commenced business operations. At 31 December 20X9, the following information relates to Page 1232 Chang: 20X7 20X8 20X9 $302.400 ($453,600) $720.000 Earnings Class) before tax 30% 35% 40% Tax rate (enacted in each year) Depreciation expense (asset cost 50.000 50.000 50.000 was $600.000) 180.000 0 78,000 Capital cost allowance 28.400 60.000 60.000 Dividends received (nontaxable) 9.600 9.600 9,600 Golf club dues