JG Ltd.has been in business for five years and incurs a loss of $520,000 in 20x15.The company has no temporary differences.The history of the company's earnings since they began operations is as follows:
The tax rate has been constant at 38%.
Required:
Prepare journal entries to record the recovery of taxes and any journal entries necessary for any loss carry forwards.In 20x16,JG incurs a further loss of $40,000.The tax rate changed to 40%.Assume probability of recovery is greater than 50% in 20x15 but less than 50% in 20x16.

Question

JG Ltd.has been in business for five years and incurs a loss of $520,000 in 20x15.The company has no temporary differences.The history of the company's earnings since they began operations is as follows: 
 The tax rate has been constant at 38%.
Required:
Prepare journal entries to record the recovery of taxes and any journal entries necessary for any loss carry forwards.In 20x16,JG incurs a further loss of $40,000.The tax rate changed to 40%.Assume probability of recovery is greater than 50% in 20x15 but less than 50% in 20x16.

Quizplus · Accepted Answer

The Answer of JG Ltd.has been in business for five years and incurs a loss of $520,000 in 20x15.The company has no temporary differences.The history of the company's earnings since they began operations is as follows: 
 The tax rate has been constant at 38%.
Required:
Prepare journal entries to record the recovery of taxes and any journal entries necessary for any loss carry forwards.In 20x16,JG incurs a further loss of $40,000.The tax rate changed to 40%.Assume probability of recovery is greater than 50% in 20x15 but less than 50% in 20x16.

JG Ltdhas Been in Business for Five Years and Incurs a a Loss