Accounting & the 3 Statements
Walk me through how a $100 NOL carryforward is created and then used, across the financials (assume 25% tax rate).
Model answer
Creation year: the company has a $100 pre-tax loss. For books it records a tax benefit and a DTA of $100 × 25% = $25 (if realization is more-likely-than-not). Net loss is -$75. On the CF statement…
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