Lu Ltd. has experienced the following accounting and taxable income: ...
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Accounting
Lu Ltd. has experienced the following accounting and taxable income:
Accounting Earnings
Taxable Income*
Tax Rate
20X4
$
(97,000)
$
(73,000)
34
%
20X5
91,000
55,500
36
20X6
101,000
93,000
34
20X7
61,000
(99,000)
30
*Before applying any available tax loss carryforwards
The differences between accounting and taxable income are caused by differences between accounting and tax expenses that will not reverse (permanent differences). All tax rates are enacted in the year to which they relate.
Required: 1. Record income tax for 20X4 through 20X7 assuming that the future use of tax loss carryforwards is not considered to be probable.
Repeat requirement 1, assuming that the use of tax loss carryforwards is considered to be probable in the loss year.
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