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In the First Year of Operations, a Company Reports Taxable

question 66

Essay

In the first year of operations, a company reports taxable income of $225,000 and paid a tax rate of 28%. It is now the end of the second year, and the company has a loss of $375,000 for tax purposes. The company's management believes it is probable the company will be able to use up its tax losses. The tax rate is currently 32%.
Required:
Compute the amounts of income tax receivable and/ or deferred income tax asset in the current (second)year.


Definitions:

Price Increase

A rise in the cost of goods or services compared to previous prices.

Price Elasticity of Demand

Determining how a change in a product's price affects the demand for that product.

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The total volume or value of products and services sold within a single business day.

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