Exam 17: Tax Losses

The following information for LAS Corporation is available: LAS applies its tax losses sequentially, that is, tax losses are carried back as far as possibl The taxes recovered for the year ended 2014 amounted to:

Geisler Corp.provided you with the following information for the year ending December 31, 2017: Net Income before taxes: $150,000 Depreciation (included in above)$90,000 CCA$250,000 The net book value of the capital assets was $1,100,000, and their UCC was $900,000 on January 1, 2017. A temporary difference of $200,000 is reflected in an accumulated deferred income tax liability (DTL)balance of $90,000 at January 1, 2017. There were no permanent differences. Taxable income in the three-year carry back period was $400,000.Tax losses are carried back as far as allowable by law. A tax rate of 45% applies to the current and previous years. Based on the above information, what is Geisler's tax recovery for 2017?

Taxes are recovered at the tax rate in effect during the year of the loss.

The use of a valuation allowance account is mandatory under IFRS.

The following information pertains to XYZ Inc.: Assuming that XYZ has a policy of tax refund maximization, how much would the company be able to recover in taxes through the use of its 2014 tax loss?

Reducing CCA is one tax strategy that a company may employ.All of the following are true except:

The following information for KEG Corporation is available: KEG applies its tax losses sequentially, that is, tax losses are carried back as far as possible.The taxes recovered for the year ended 2014 amounted to:

JG Corporation incurred a tax loss of $945,000.Based on a tax rate of 38%, what is the potential tax benefit?

What factor would most likely cause a firm to choose the carry forward only option for a net operating loss?

IFRS requires that any Valuation Allowance account balances (if used)be shown separately on the Statement of Financial Position.

Once it is deemed that a potential benefit of a loss carry forward does not meet the more likely than not criteria, the benefit may not be recognized.

The following data represents the complete taxable income history for a firm: What is the tax liability for 2016?

What options are open to a company that did not previously set up a deferred income tax benefit of a tax loss carry forward but has now determined that the probability of realization is greater than 50%?

Net operating tax carry backs and carry forwards never result in a cash refund of prior taxes paid but may result in a reduction in taxes for subsequent years.

The following information for KAR Corporation is available: KAR carries applies its tax losses sequentially, that is, tax losses are carried back as far as possible.The taxes recovered for the year ended 2014 amounted to:

How does the existence of a loss in the year impact the accounting of temporary differences?

Geisler Corp.provided you with the following information for the year ending December 31, 2017: Net Income before taxes: $150,000 Depreciation (included in above)$90,000 CCA$250,000 The net book value of the capital assets was $1,100,000, and their UCC was $900,000 on January 1, 2017. A temporary difference of $200,000 is reflected in an accumulated deferred income tax liability (DTL)balance of $90,000 at January 1, 2017. There were no permanent differences. Taxable income in the three-year carry back period was $400,000.Tax losses are carried back as far as allowable by law. A tax rate of 45% applies to the current and previous years. Geisler's 2017 journal entry to record its Deferred Tax amounts would include:

Under income tax laws and regulations a corporation that sustains a net operating loss for the current year may elect to carry back and/or carry forward the loss for income tax purposes.

A company carrying back a loss must use the earliest year first.

JG Ltd.has been in business for five years and incurs a loss of $520,000 in 20x15.The company has no temporary differences.The history of the company's earnings since they began operations is as follows: The tax rate has been constant at 38%.Required: Prepare journal entries to record the recovery of taxes and any journal entries necessary for any loss carry forwards.In 20x16, JG incurs a further loss of $40,000.The tax rate changed to 40%.Assume probability of recovery is greater than 50%.