1. AirParts Corporation reported an operating loss of $14 million for financial reporting and tax
purposes. Taxable income last year and the previous year, respectively, was $14 million and $9
million. The enacted tax rate each year is 30%.
Prepare the journal entry to recognize the income tax benefit of the operating loss. AirParts elects
the carryback option.
AirParts Corporation reported an operating loss of $14 million for financial reporting and tax
purposes. Taxable income last year and the previous year, respectively, was $14 million and $9
million. The enacted tax rate each year is 30%.
Solution
Answer:
Particulars Debit Credit
Receivable - income tax refund 6900000
Income tax benefit - operating loss 6900000