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On January 1, 2016, Drugz Inc., a large pharmaceutical company, commenced business operations in Canada....

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Accounting

image On January 1, 2016, Drugz Inc., a large pharmaceutical company, commenced business operations in Canada. The following information is available: The tax rates for any given year is known by the company during the previous year. Thus for example, the tax rate for 2020 will be known during 2021. [This should read as : for 2021 will be known during 2020.] Assume that the company carries back all its losses first. Further in 2021, it is judged more likely than not that the company will generate taxable incomes in future years. Required: 1. Prepare journal entries to record all tax related effects for 2020 and 2021. All supporting calculations should be shown. HINT: Determining the taxable income would be very useful. 2. For this Question, ignore the only the information on the amount of taxable loss given in the problem for 2021. Instead, now assume that Drugz was of the opinion that it was possible all of the losses would be used within the carryforward period. In 2021 it recorded a deferred tax asset of $369,360 to recognize this loss carry forward after carrying back the maximum loss possible to 2018 and later. Also assume the 2021 tax rate was known in 2020. How much was the taxable loss in 2021 ? How much was the accounting loss in 2021

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