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.

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Definitions:

Graph

A visual representation of data or a function using a system of coordinates.

Vertex

A vertex can refer to the highest or lowest point on a parabola, or a corner point in geometric shapes and graphs.

Function

In the field of mathematics, a relation is a connection between a set of inputs and a possible set of outputs where every input corresponds to precisely one output.

Parabola

A symmetrical plane curve formed by the set of all points equidistant from a fixed point (focus) and a fixed straight line (directrix).