MAC, Inc, Completed Its First Year of Operations with a Pretax

question 47

Essay

MAC, Inc., completed its first year of operations with a pretax loss of $300,000. The tax return showed a net operating loss of $500,000. The $200,000 book-tax difference results from excess tax depreciation over book depreciation. Management has determined that they should record a valuation allowance equal to the net deferred tax asset. Prepare the journal entries to record the deferred tax provision and the valuation allowance.

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Definitions:

School-Aged Children

Children in the age group that typically attend school, usually considered to be between the ages of 6 and 18.

Second Grade

An educational level following first grade, typically involving students aged 7 to 8, focusing on developing basic math, reading, and writing skills.

Third Grade

A year or level of education in primary schools in various education systems, typically involving children ages 8 to 9.

Treisman's Attenuation Theory

A theory proposed by Anne Treisman that suggests information is processed at varying levels of attention, where some stimuli are attended to less intensely but not completely filtered out.