Reference no: EM132945245
Lowrider Inc. has reported taxable income every year since it began operations in 2017. In 2020, the company reported a tax loss of $500,000 due to Covid 19. During the previous 2 years, Lowrider paid federal income taxes of $28,000 in 2018, $35,000 in 2019
Lowrider expects to return to profitability in 2021 and beyond. At December 31, 2021, the company fully expects to use its tax loss carryforward. Assume that, at January 1, 2021, Lowrider did not have either a deferred tax asset or deferred tax liability. The income tax rate is 21%.
Problem (1) For the year ended December 31, 2021, what should Lowrider report a net loss?
Problem (2) What should the income tax refund receivable be reported under current assets?
Problem (3) What should the deferred tax asset be reported under noncurrent assets?
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