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Continental Corporation Anticipates a 34% Tax Rate for the Next

Question 115

Essay

Continental Corporation anticipates a 34% tax rate for the next several years and has a $500,000 NOL carryover.
a) What is the journal entry to record the NOL carryover's tax benefits, assuming that no valuation is needed?
b) What is the journal entry if Continental Corporation estimates that one-half of the NOL will not be realized?

Correct Answer:

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a) Deferred tax asset 170,000
...

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