Question
Starlight reported the following pretax financial income (loss) for the years 20152019. Pretax Income (Loss) Tax Rate 2015 $640,000 38% 2016 230,000 38% 2017 145,000
Starlight reported the following pretax financial income (loss) for the years 20152019. Pretax Income (Loss) Tax Rate 2015 $640,000 38% 2016 230,000 38% 2017 145,000 38% 2018 (800,000) 35% 2019 180,000 35%
Pretax financial income (loss) and taxable income (loss) were the same for all years involved. Assume the carryback provision is used first for net operating losses.
Instruction : Prepare the journal entries for the years 20172019 to record income tax expense, income taxes payable (refundable), and the tax effects of the loss carryback and loss carryforward, assuming that based on the weight of available evidence, it is more likely than not that one-fifth of the benefits of the loss carryforward will not be realized.
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