Operating Losses
Response to the following problem:
The Internal Revenue Code allows a corporation to carry back or carry forward an "operating loss" for a given year.
Required
1. Describe an operating loss carryback and a carryforward.
2. For a carryback, identify and briefly explain the two important conceptual questions.
3. For a carryforward, identify and briefly explain the two important conceptual questions.
4. Briefly summarize the generally accepted accounting principles for the financial reporting of (a) an operating loss carryback and (b) an operating loss carryforward.