|Posted: 04 May 2010 at 16:12 | IP Logged
Eller Company started operations on 1/1/X1 and has reported profits for its first three years. X4 operations have resulted in a $100,000 operating loss for tax purposes. Which of the following statements are true?
I. If Eller "carries back" the $100,000 loss, a deferred tax asset will result.
II. If Eller "carries forward" the entire $100,000 loss, a $100,000 tax benefit will be shown on its X4 income statement.
A .None are true
B I only
C. II only
D. I and II
The correct answer is A.
I thought statement II is correct? How to make II correct then?? Thanks