MAC,IncCompleted Its First Year of Operations with a Pretax Loss

question 32

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,which MAC will carryforward.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.Assuming a tax rate of 34%,prepare the journal entries to record the deferred tax provision and the valuation allowance.

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Definitions:

Pros And Cons

The advantages (pros) and disadvantages (cons) of a specific decision, action, or situation.

Research

A systematic investigation into and study of materials, sources, etc., in order to establish facts and reach new conclusions.

Settling Down

The process of adopting a more stable and less erratic lifestyle, often associated with making long-term commitments in personal and professional domains.

Awakened

Refers to the state of being roused from sleep or gaining consciousness, or metaphorically, becoming aware of social or personal issues.