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24 March, 04:59

During 2019, its first year of operations, Bento Steel Corporation reported a net operating loss of $500,000 for financial reporting and tax purposes. Bento carryforward the NOL. Assuming 2020 pretax accounting income and taxable income is $100,000. The enacted tax rate is 25% for both years. The amount of net income reported in 2020 income statement would be:

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  1. 24 March, 06:51
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    The amount of net income reported in 2020 income statement would be $75,000.

    Explanation:

    Pretax accounting income for 2020 = $100,000

    Income tax expense for 2020 = Current tax + Reversal of Deferred tax assets

    = ($100,000 - $100,000) * 25% + ($100,000*25%)

    = $25,000

    Amount of net income reported in 2020 income statement = Pretax accounting income - Income tax expense

    = $100,000 - $25,000

    = $75,000

    Therefore, The amount of net income reported in 2020 income statement would be $75,000.
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Home » Business » During 2019, its first year of operations, Bento Steel Corporation reported a net operating loss of $500,000 for financial reporting and tax purposes. Bento carryforward the NOL. Assuming 2020 pretax accounting income and taxable income is $100,000.
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