In its first three years of operations Carlos Productions, a musical production company, reported the following operating income (loss) amounts: 2019 $ 450,000 2020 (1,000,000 ) 2021 1,800,000 There were no other deferred income tax amounts in any year. The enacted income tax rate was 25% in 2020 and 30% thereafter. In its 2020 balance sheet, what amount of deferred tax asset should Carlos report relevant to the NOL? (It concludes that no valuation allowance is necessary.)

Explanation:

                                      Temporary Difference

2020 Loss                    $(1,000,000)*25%=$250,000

The $250,000 is deductible temporary difference and will be recorded as

   Deferred Tax Asset Dr.$250,000

   Deferred Tax Income  Cr.$250,000

It is given in question that company has $1.8 million profits in 2021, therefore in such case deferred tax asset is recorded as there is certain that company will have profits in future.

answer; /// blank(1); increases; blank(2); decreases;

two years ago, when picking flowers in the mountains back of yosemite valley, i found a book. it was blotted and storm-beaten; all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however; many of the inner pages were well preserved. and although all were more or less stained and torn, whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today; its granite pages have been torn and blurred by the same storms that wasted the castaway book.

two years ago, when picking flowers in the mountains back of yosemite valley; i found a book. it was blotted and storm-beaten, all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however, many of the inner pages were well preserved. and although all were more or less stained and torn; whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today, its granite pages have been torn and blurred by the same storms that wasted the castaway book.