What are the entries to record the tax loss carryforward

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Question - In 2015, its first year of operations, Landon Corp. has a $700,000 net operating loss when the tax rate is 30%. In 2016, Landon has $300,000 taxable income and the tax rate remains 30%.

Instructions

Assume the management of Landon 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 2016 operations are known).

(a) What are the entries in 2015 to record the tax loss carryforward?

(b) Assuming that at the end of 2016 it is more likely than not that the deferred tax asset will be realized, what entries would be made in 2016 to record the current and deferred income taxes and to recognize the loss carryforward?

Reference no: EM131819983

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