Kervadin had tax losses carried forward of 2,000,000, with no deferred tax asset for lack of probable profits. It acquires Lumbrac, which is highly profitable; tax law (case data) now allows it to set those losses against Lumbrac's profits, and their use becomes probable. Tax rate: 25%. Record the entry for Kervadin's losses.
- Kervadin's tax losses carried forward
- 2,000,000
- Tax rate (%)
- 25 %