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Riley Inc. reports the following pre - tax incomes ( losses ) for both financial reporting purposes and tax purposes: Year Accounting Income ( Loss
Riley Inc. reports the following pretax incomes losses for both financial reporting purposes and tax purposes:
Year
Accounting Income Loss
Tax Rate
$
The tax rates listed were all enacted by the beginning of Riley reports under the ASPE future income taxes method.
Instructions
Prepare the journal entries for each of the years to to record income tax. Assume the tax loss is first carried back and that, at the end of the loss carryforward benefits are judged more likely than not to be realized in the future.
Using the assumptions in part a prepare the income tax section of the and income statements, beginning with the line Income loss before income tax.
Prepare the journal entries for and Assume that it is more likely than not that one quarter of the carryforward benefits will not be realized. This company does not use a valuation allowance.
Using the assumptions in part c prepare the income tax section of the and income statements, beginning with the line Income loss before income tax.
Using the assumptions in part c discuss what information should be disclosed in the notes to the financial statements.
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