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    Feb 25, 2012, 04:10 AM
    Accounting question : A company incurred a net operating loss of $582,000 in 2011
    A company incurred a net operating loss of $582,000 in 2011. Combined income for 2008, 2009, and
    2010 was $464,000. The tax rate for all years is 35%. Assume that it is more likely than not that the entire tax loss carryforward will not be realized in future years. Assume now that the company earns taxable income of $40,000 in 2012 and that at the end of 2012 there is still too much uncertainty to recognize a future tax asset.

    Prepare the journal entries that are necessary at the end of 2012 assuming that the company does not use a valuation allowance account.

    Prepare the journal entries that are necessary at the end of 2012 assuming that the company does use a valuation allowance account.

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