Exam 17: Tax Losses

The amount of any unused tax losses must be disclosed on the face of the income statement.

A tax loss represents:

If a potential benefit of a loss carry forward that was previously determined to meet the more likely than not criteria has now been determined not to meet the criteria, it should be reversed.

XYZ Ltd., a taxable Canadian corporation, reported the following revenues and expenses in these amounts for both taxes and financial reporting (the tax rate is 40%). What is income tax expense for the year?

JR Ltd.provided you with the following information: There are no temporary differences.What will be the amount of the tax refund received in 2015 assuming that a policy of tax refund maximization is followed?

The following information for JMR Corporation is available: JMR 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:

The following information pertains to ABC Inc.: Assume that ABC Inc.meets the more likely than not criteria for tax loss carry forward recognition.The tax rate for 2015 and beyond is expected to be 20%, and this rate was no known when the 2014 tax return was filed.This information would result in:

Existing sufficient taxable permanent differences, which will result in taxable income, is one piece of evidence to support a more likely than not criteria.

When applying tax loss carry backs, most companies have a policy of maximizing their return in the current year.

JMR's taxable income for the first five years was as follows: Calculate the tax recovery in 20x15.

Better matching is achieved when deferred income tax assets due to carry forwards are fully recognized in the year of the loss.

JMR Corp.incurred a loss in 20x15 after several years of taxable income.After the carry back, JMR still had losses to use up in the amount of $500,000.The applicable tax rate was 40%.In 20x16, the tax rate goes down to 38%.Assuming that losses have not been used but it is still probable that they will be used, prepare the journal entry to set up the deferred benefit in 20x15 and any other entries applicable to the deferred benefit.

In 2013, JMR Corp.set up a deferred income tax benefit of a tax loss carry forward as the probability of realization was greater than 50%.It is now the end of 2013 and management has determined that 50% of the benefit will not be realized.Management should:

JMR's taxable income for the first five years was as follows: Calculate the tax recovery in 20x15.

The following data represents the complete taxable income history for a firm: What is the amount of the Deferred Tax Asset - carry forward to be recognized on the 2015 statement of financial position at the end of 2015, assuming that the more likely tha not criteria has been met, and that the tax rate is expected to remain at 40% for the foreseeable future

CCA is an optional deduction and may be adjusted downwards in order to create taxable income.

KAR's taxable income for the first five years was as follows: Calculate the tax recovery in 20x15.

KER Corp.incurred a loss in 20x15 after several years of taxable income.After the carry back, KER still had unused losses the amount of $357,000.The applicable tax rate was 40%.In 20x16, the tax rate goes up to 45%.Assuming that losses have not been used but it is still probable that they will be used, prepare the journal entry to set up the deferred benefit in 20x15 and any other entries applicable to the deferred benefit.

A tax benefit represents:

VB Corporation reported a net loss of $50,000 for accounting purposes.Items included in the loss are golf dues amounting to $3,000, meals and entertainment totalling $10,000, CCA of $10,000, depreciation of $5,000, warranty expenses of $8,000 and warranty expenditures of $6,000.VB's taxable income is: