Prepare the journal entries to record income tax expense

Reference no: EM132748914

Question: Starlight reported the following pretax financial income (loss) for the years 2019-2022. Pretax Income (Loss)

Tax Rate

2019 330,000 35%

2020 (60,000) 35%

2021 (800,000) 21%

2022 30,000 21%

Pretax financial income (loss) and taxable income (loss) were the same for all years involved.

Instruction: Prepare the journal entries for the years 2020 to 2022 to record income tax expense and the effects of the net operating loss carryforwards. Additionally, assume that based on the weight of available evidence, the company judged that more likely than not that one-fourth of the benefits of the loss carryforward will not be realized.

Reference no: EM132748914

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