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Present a partial income statement

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Reference no: EM132865084

Question - At December 31, 20A1, Columbia Enterprises Inc. has a net operating loss (NOL) of P200,000. This is the first time that Columbia incurred net operating loss. Under the current tax law, this can be carried over on the next three taxable years. Columbia expects to realize taxable income in 20A2 and thereafter, and it will be able to utilize the NOL as follows: 20A2-P150,000; 20A3-P50,000. The enacted tax rate in the current and future periods was at 30%. There were no temporary and permanent differences. Income taxes for a given taxable year is payable in April of the subsequent year.

On December 31. 20A2, Columbia realized a taxable income of P75,000 (before NOL). Columbia expects to utilize the balance of the NOL in 20A3.

On December 31, 20A3, Columbia incurred a NOL of P300,000. Because of adverse business conditions, it does not expect to realize any taxable income for the next 5 years.

On December 31, 20A4, Columbia realized a taxable income of P150,000 (before NOL). It expects to have a taxable income of P100,000 for 20A5 but it does not expect to realize any taxable income for 20A6 and 20A7.

Required -

Compute the balance of the DTA account as of December 31, 20A1, 20A2, 20A3 and 20A4.

Prepare the journal entries to record the income taxes for 20A1, 20A2, 20A3 and 20A4.

Present a partial income statement beginning with "Income before income taxes" for the year ended December 31, 20A1, 20A2, 20A3 and 20A4.

Reference no: EM132865084

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