Answer:
$1,620,000
Explanation:
Assume that Sharp operates in an industry for which NOL carryback is allowed.
In its first three years of operations Sharp reported the following operating income (loss) amounts: 2019 $ 1,350,000 2020 (3,150,000 ) 2021 5,400,000
There were no deferred income taxes in any year. In 2020, Sharp elected to carry back its operating loss.
The enacted income tax rate was 25% in 2019 and 30% thereafter.
In its 2021 balance sheet, what amount should Sharp report as current income tax payable is the applicable tax rate for 2021 applied on the income of the year: 30% x 5,400,000 = $1,620,000
Answer:
current income tax payable = $1,012,500
Explanation:
year     profit/loss     taxes
2019 Â Â Â Â $1,350,000 Â Â $337,500
2020 Â Â Â ($3,150,000) Â ($945,000)
2021 Â Â Â $5,400,000 Â $1,620,000
Since Sharp decided to carry back their NOL for 2020, they cancel out of their 2019 taxes, and $607,500 are left to carry forward for 2021. Net taxes due in 2021 after NOL carry forward = $1,620,000 - $607,500 = $1,012,500
