Net Operating Loss Carryback & Carryforward (13:13) FAR Study Group

Accounting for net operating losses (NOL) & recording the income tax expense section on the income statement & tax benefit due for carryback & carryforward, basic example of a tax loss carryback & tax loss carryforward (no valuation allowance or temporary differences), net operating loss is where expenses exceed revenues, for tax purposes net operating losses can be carried back to offset any previous taxes paid (based on the carryback rules), based on the loss carryback a tax refund receivable is setup along with a tax benefit due (contra tax expense account), any loss not offset by the carryback rules can be carried forward to offset any future taxes paid, in this case a deferred tax asset is setup, the deferred tax asset is later reduced by the amount of tax expense in the future years, detailed accounting by Allen Mursau