Reference no: EM132965980
Mortel Industries, Ltd., follows IFRS and reported the following taxable incomes/losses and tax rates for the first five years ended December 31:
GENERAL INFORMATION
2016 2017 2018 2019 2020
Taxable income (loss): $ 50,000 (400,000) $100,000 230,000 620,000
Tax rate: 25% 40% 34% 34% 42%
Mortel had decided to always first carryback losses in any given year before carrying them forward. All tax rate changes were enacted as of the beginning of the year and these rates were not known until the year of change.
REQUIRED:
Problem 1. Prepare the journal entry/entries on December 31, 2017 to record only the loss carryback and/or loss carryforward for the loss in 2017. Assume there are no uncertainties about the realization of the net loss reported at December 31, 2017 and that it was more likely than not for it to generate profits in the years following any loss.
Problem 2. For the loss of 2017 that is carried forward, prepare the related journal entry/entries required to be made in 2018, 2019 and 2020.
Problem 3. Now assume that it was expected in 2017 that only 60% of the losses determined as per the assumptions in [1] above, could be used within the carryforward period. Prepare the journal entry required to be made on December 31, 2017 to record this situation.
Problem 4. For this Question, ignore the information on the amount of taxable loss given in the problem for 2017. Instead, now assume that Mortel decided that it was possible all of the losses would be used within the carryforward period and that in 2017 they correctly set up an asset of $408,000 to recognize this loss carry forward after carrying back the maximum loss possible to 2016. Also assume the 2018 tax rate was known in 2017. How much was the taxable loss in 2017?
|
Calculate the present value of an ordinary annuity
: You have two options to receive the inheritance: receive $ 500,000 at the end of each of the next 10 years or receive a one. Determine which is the best option.
|
|
Calculate account balance if rate decreased to four percent
: All the savings you invest in a mutual fund account that has a 7% annual return, determine the balance of the account when you reach the 62 years.
|
|
Determine the time would take to double the investment
: If an investor intends to double $ 25,000 by investing in a bank that pays 7% interest per year, determine the time it would take to double the investment.
|
|
How do calculate the present value of the bond
: Suppose a Puerto Rico government bond pays $ 3,255.80 within 4 years at 4% interest. Calculate the present value of the bond.
|
|
Prepare the journal entry on december to record only loss
: Prepare the journal entry/entries on December 31, 2017 to record only the loss carryback and/or loss carryforward for the loss in 2017.
|
|
What is total cost to be recorded for machine for dornton co
: What is the total cost to be recorded for machine? In moving the machine to its steel mounting, $280 in damages occurred. Also, $60 of materials is used.
|
|
Demonstrate what estimated cost of common equity
: Booher Book Stores has a beta of 0.5. The yield on a 3-month T-bill is 5%. What is the estimated cost of common equity using the CAPM?
|
|
What is total cost to be recorded for machine for dornton co
: What is the total cost to be recorded for machine? In moving the machine to its steel mounting, $280 in damages occurred. Also, $60 of materials is used.
|
|
Name four financial statements needed for nfp entities
: What are the three characteristics that distinguish a not-for-profit (NFP) entity from a business entity? Name four financial statements needed for NFP entities
|