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What amount should abc inc report as deferred tax asset

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Reference no: EM132672313

ABC Inc. had the following pretax income (loss) over its first three years of operations:

2019  $500,000

2020 (900,000)

2021 1,000,000

For all three years there were neither temporary nor permanent differences and the tax rate was 25%. No valuation account was deemed necessary for the deferred tax asset as of December 31, 2020, or December 31, 2021.

Required:

Problem 1: Prepare the journal entry to record ABC's income tax expense for 2019.

Problem 2: Assume that ABC Inc. operates in an industry for which NOL carry back is allowed:

  1. Prepare the journal entry to record ABC's income tax expense for 2020.
  2. Prepare the journal entry to record ABC's income tax expense for 2021.
  3. In its 2021 balance sheet, what amount should ABC Inc. report as deferred tax asset?

Problem 3: Assume that ABC Inc. operates in an industry for which NOL carry back is not allowed:

  1. Prepare the journal entry to record ABC's income tax expense for 2020.
  2. Prepare the journal entry to record ABC's income tax expense for 2021.
  3. In its 2021 balance sheet, what amount should ABC Inc. report as deferred tax asset

Reference no: EM132672313

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