Assume that Peridot operates in an industry for which NOL carryback is not allowed. In its first four years of operations Peridot Jewelers reported the following operating income (loss) amounts: 2018 $ 150,000 2019 100,000 2020 (425,000 ) 2021 450,000 There were no other deferred income taxes in any year. The enacted income tax rate was 25%. In its 2021 income statement, what amount should Peridot report as current income tax payable?

Peridot

In its 2021 income statement, what amount should Peridot report as current income tax payable is:

$22,500.

Explanation:

a) Data and calculations:

Operating income (loss) amounts:

2018 $ 150,000

2019    100,000

2020 (425,000 )

2021   450,000

Income tax rate = 25%

2021 Current income tax payable

2021 Net operating profit  450,000

2020 Net operating loss  (360,000) limited to 80% of $450,000

Taxable profit after relief    90,000

= 25% of $90,000 = $22,500

b) Since the Net Operating Loss (NOL) carryback is not allowed in the Peridot's industry, it implies that it can only carry forward its operating loss to future years (not get any loss relief from previous years). Therefore, the NOL of $425,000 will be carried forward to 2021 and beyond.  However, the loss relief in the 2021 is limited to 80% of 2021 operating income of $450,000.  The unrelieved portion of $65,000 ($425,000 - $360,000) will be carried forward to 2022.

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know