medium · Financial Accounting accounting-cycle-financial-statements
A company has a Net Operating Loss (NOL) of 100million in a year when the tax rate is21%. It expects to be profitable in the future.
How is this recorded on the balance sheet?
- As a reduction in Retained Earnings of 100 million only
- As a Deferred Tax Asset of 21 million
- As a Deferred Tax Liability of 21 million
- As a contra-equity account of 21 million
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