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Puritan Corp. reported the following pretax accounting income and taxable income for its first three years of operations: 2017 $ 350,000 2018 (600,000 ) 2019 700,000 Puritan's tax rate is 40% for all years. Puritan elected a loss carryback. As of December 31, 2018. Puritan was certain that it would recover the full tax benefit of the NOL that remained after the operating loss carryback. What would be the net loss in 2018 reported in Puritan’s income statement?

Answer :

ammary456

Answer:

Net loss in 2018 reported in Puritan’s income statement = $360,000

Explanation:

Net Loss:

Net loss is the amount by which a company's total costs are more than its total sales during a particular period.

Formula:

Net loss = -taxable income + Income tax benefit

As taxable income for 2018 = $600,000 and Puritan's tax rate is 40% for all years

Therefore by putting the values in the above formula, we get

Net loss in 2018 in Puritan’s income statement = -$600,000 +  ($600,000 * 40%)

Net loss in 2018 reported in Puritan’s income statement =  -$600,000 + 1500000

Net loss in 2018 to be reported in Puritan’s income statement = $360,000

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