The entire taxable income history of a firm appears below, Ask an Expert

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The entire taxable income history of a firm appears below. There are no temporary or permanent differences. Through 20x5, the tax rate has been 30%. The firm chooses the carry forward only option for NOLs on its tax return. Sufficient future (after 20x5) taxable income is assured to realize any recorded DTA.

Year Taxable Income

20x2 $14,000

20x3 $10,000

20x4 $10,000

20x5 ($24,000)

A. Record the tax accrual entry for 20x5 (the current year)

B. In 20x6, the firm earned $14,000 of taxable income. During 20x6, the tax rate for 20x6 and future years was changed to 20%. Record the tax accrual entry for 20x6.

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Financial Accounting, Accounting

Category:- Financial Accounting
Reference No.:- M92050078

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