Reference no: EM131591320

Question - During 2017 a Company reported a net operating loss of $150 million for financial accounting and income tax purposes. The rate in 2017 is 35%. Taxable income, tax rates, and taxes paid in previous years was as follows:

2015 taxable income $10 million tax rate 35% taxes paid $3.5 million

2016 taxable income $10 million tax rate 35% taxes paid $35 million

Management has decided that it is more likely than not that 50% of any loss carry forward will expire unutilized.

Based on the above, please answer the following questions:

1. Prepare the necessary entries 2017 to account for the income taxes

Assume that accounting and taxable income for 2018 is actually $100 million, the tax rate remains 35%, and all the loss carryforward can be used

2. Prepare the necessary accounting entries in 2018 to account for the income taxes.