Tham khảo tài liệu 'critical financial accounting problems issues and solutions_6', tài chính - ngân hàng, kế toán - kiểm toán phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | 86 Critical Financial Accounting Problems This entry is similar to the previous entry intended to recognize the operating loss carryback to three previous years. b. Deferred Tax Asset 20 000 Income Tax Benefit from Operating Loss Carryforward 20 000 Therefore the financial statements include the following new information a. The balance sheet will include an income tax refundable receivable of 52 500 as a current asset a deferred tax asset of 20 000. b. The 1995 income statement will disclose the income tax benefits as follows. Pretax Operating loss 250 000 Income Tax Benefit a. Benefit from Operating Loss Carryback 52 500 b. Benefit from Operating Loss Carryforward 20 000 177 500 Let s now assume that in 1997 the Dali Company has a taxable income of 300 000 and the tax rate is still 40 . Given the benefits of the operating loss carryforward recognized in 1996 the income tax payable for 1997 would be as follows 1. Taxable Income Prior to the Loss Carryforward 300 000 2. Less Loss Carryforward 50 000 3. Taxable Income 250 000 4. Income Taxes Payable for 1996 at 40 100 000 Accordingly the basic entry at the end of 1997 would be as follows Income Tax Expense 120 000 Deferred Tax Asset 20 000 Income Taxes Payable 100 000 The lower portion of the 1997 income statement is as follows Pretax Operating Income 300 000 Accounting for Income Taxes 87 Income Tax Expense Current 100 000 Deferred 20 000 120 000 Net Income 180 000 Example of an Operating Loss Carryforward and Valuation Allowance Returning again to the Dali Company let s assume that in 1996 there is insufficient positive evidence of future taxable income. There is a need for a valuation allowance to reduce the deferred asset. Therefore the basic entries at the end of 1996 are as follows a. Income Tax Refund Receivable 52 500 Income Tax Benefit from Operating Loss Carryback 52 500 b. Deferred Tax Asset 20 000 Income Tax Benefit Operating Loss Carryforward 20 000 c. Income Tax Benefit from 20 000 Operating Loss .
