What are the entries to record the tax loss

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Problem - In 2012, its first year of operations, Kimble Corp. has a $700,000 net operating loss when the tax rate is 30%. In 2013, Kimble has $360,000 taxable income and the tax rate remains 30%. Instructions Assume the management of Kimble Corp. thinks that it is more likely than not that the loss carryforward will not be realized in the near future because it is a new company (this is before results of 2013 operations are known).

(a) What are the entries in 2012 to record the tax loss carryforward?

(b) What entries would be made in 2013 to record the current and deferred income taxes and to recognize the loss carryforward? (Assume that at the end of 2013 it is more likely than not that the deferred tax asset will be realized.)

Reference no: EM131807078

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