The following information pertains to an NOL incurred by Honda Inc. and is used to answer questions $18-20.$

a$.$ Presented below is a schedule showing the taxable income $($TI$),$ pretax financial income $($PFI$),$ and

Federal income taxes paid for each reporting year ended December $31.$

Note: The company has no permanent or temporary differences, and no deferred tax balances existed at $1-1-$YR$07.$

b$.$ Assume that under current Federal income tax law corporations are permitted to carryback operating losses for $2$ years

and carryforward operating losses for $2$ years. Tax law limits NOL deductions to $100\%$ of taxable income in the year the

NOL deduction is claimed. The company has elected to first use the carryback provisions of the law.

c$.$ The table below discloses the taxable income the company expects to report for each year. Also presented are the

tax rates for future years which are set forth under current tax law.

$18.$ The YR$07$ journal entry to record the effect of the carryback election would be:

a$.$ Dr$.$ Income Tax Refund Receivable $9$

Cr$.$ Deferred Tax Asset $9$

b$.$ Dr$.$ Income Tax Refund Receivable $9$

Cr$.$ Tax Benefit of NOL Carryback $9$

c$.$ Dr$.$ Deferred Tax Asset $9$

Cr$.$ Tax Benefit of NOL Carryback $9$

d$.$ Dr$.$ Income Tax Refund Receivable $9$

Dr$.$ Deferred Tax Asset $27$

Cr$.$ Tax Benefit of NOL Carryback $36$

e$.$ None of the answers provided are correct.

$19.$ The YR$07$ journal entry to record the effect of the carryforward, if any, $($before consideration of any carryforward expected

to be lost$)$ would be:

a$.$ Dr$.$ Deferred Tax Asset $12$

Cr$.$ Tax Benefit of NOL Carryforward $12$

b$.$ Dr$.$ Tax Benefit of NOL Carryforward $12$

Cr$.$ Deferred Tax Liability $12$

c$.$ Dr$.$ Deferred Tax Asset $20$

Cr$.$ Tax Benefit of NOL Carryforward $20$

d$.$ Dr$.$Tax Benefit of NOL Carryforward $20$

Cr$.$Other Comprehensive Income $20$

e$.$ None of the answers provided are correct.

$20.$ The YR$07$ journal entry needed to record the effect of any carryforward expected to be lost would be:

a$.$ No entry is needed since the company expects sufficient future income to fully realize the benefit of the NOL carryforward.

b$.$ Dr$.$ Tax Benefit of NOL Carryforward $12$

Cr$.$ Deferred Tax Asset $12$

c$.$ Dr$.$ Estimated Loss Resulting from Expired NOL Carryforward $8$

Cr$.$Deferred Tax Asset $8$

d$.$ Dr$.$Tax Benefit of NOL Carryforward $8$

Cr$.$Allowance to Reduce DTA to Expected Realizable Value $8$

e$.$ None of the answers provided are correct