At the end of 20X5, Gimelane carries a deferred tax asset on all of its 800,000 of losses carried forward. At the end of 20X6, only 320,000 are probably usable; at the end of 20X7, after a recovery, 600,000 become so (case assumptions; losses not used in the meantime). Tax rate: 25%. Compute the 20X6 reduction and the 20X7 reversal.
- Losses carried forward (unchanged)
- 800,000
- Losses probably usable at end of 20X6
- 320,000
- Losses probably usable at end of 20X7
- 600,000
- Tax rate (%)
- 25 %