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elena-14-01-66 [18.8K]
3 years ago
11

During its first year of operations, Nive reported a net operating loss of $15 million for financial reporting and tax purposes.

The enacted tax rate is 25%. Prepare the journal entry to recognize the income tax benefit of the net operating loss.
Business
1 answer:
GaryK [48]3 years ago
6 0

Answer:

Dr Deferred Tax Liability $3,750,000

Cr Income Tax Benefit-Operating Loss $3,750,000

Explanation:

Based on the information given we were told that net operating loss of the amount of $15 million was reported for financial reporting and tax purposes in which the tax rate is 25%. Therefore the journal entry to recognize the income tax benefit of the net operating loss will be :

Dr Deferred Tax Liability $3,750,000

Cr Income Tax Benefit-Operating Loss $3,750,000

($15 million *25%)

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