Loser Inc.reported the following pretax amounts for each of the last three years: Additional Information:
The tax rate in Year 3 and prior was 20%.The tax rate for Year 4 and beyond will be 25% and is known by Loser in Year 3.
At the start of Year 3, Loser had a DTL balance of $50,000 due to the excess of CCA over depreciation taken by Loser up to that date.During Year 3, the company took $110,000 more CCA than depreciation.
During Year 3 the company bought a parcel of land, which it had to write down during the same period due to environmental contamination rendering a portion of the land non-usable.The amount of the write-down was $40,000.
Loser Inc.has a policy of carrying tax losses back as far as possible and carrying forward the balance (the more-likely-than-not)criteria has been met for any tax loss carry-forwards.
Loser Inc.currently has no capital gains, but it expects to have enough capital gains in the future against which it will be able to use any capital loss carry forwards.
The company uses a single account for all of its deferred tax asset/liability balances.
Required:
Prepare all the journal entries and show all Deferred Tax Asset and/or Liability balances as at the end of Year 3.

Question

Loser Inc.reported the following pretax amounts for each of the last three years:  Additional Information:
The tax rate in Year 3 and prior was 20%.The tax rate for Year 4 and beyond will be 25% and is known by Loser in Year 3.
At the start of Year 3, Loser had a DTL balance of $50,000 due to the excess of CCA over depreciation taken by Loser up to that date.During Year 3, the company took $110,000 more CCA than depreciation.
During Year 3 the company bought a parcel of land, which it had to write down during the same period due to environmental contamination rendering a portion of the land non-usable.The amount of the write-down was $40,000.
Loser Inc.has a policy of carrying tax losses back as far as possible and carrying forward the balance (the more-likely-than-not)criteria has been met for any tax loss carry-forwards.
Loser Inc.currently has no capital gains, but it expects to have enough capital gains in the future against which it will be able to use any capital loss carry forwards.
The company uses a single account for all of its deferred tax asset/liability balances.
Required:
Prepare all the journal entries and show all Deferred Tax Asset and/or Liability balances as at the end of Year 3.

Quizplus · Accepted Answer

The Answer of Loser Inc.reported the following pretax amounts for each of the last three years:  Additional Information:
The tax rate in Year 3 and prior was 20%.The tax rate for Year 4 and beyond will be 25% and is known by Loser in Year 3.
At the start of Year 3, Loser had a DTL balance of $50,000 due to the excess of CCA over depreciation taken by Loser up to that date.During Year 3, the company took $110,000 more CCA than depreciation.
During Year 3 the company bought a parcel of land, which it had to write down during the same period due to environmental contamination rendering a portion of the land non-usable.The amount of the write-down was $40,000.
Loser Inc.has a policy of carrying tax losses back as far as possible and carrying forward the balance (the more-likely-than-not)criteria has been met for any tax loss carry-forwards.
Loser Inc.currently has no capital gains, but it expects to have enough capital gains in the future against which it will be able to use any capital loss carry forwards.
The company uses a single account for all of its deferred tax asset/liability balances.
Required:
Prepare all the journal entries and show all Deferred Tax Asset and/or Liability balances as at the end of Year 3.

Loser IncReported the Following Pretax Amounts for Each of the Last