Lafayette,Inc

question 43

Essay

Lafayette,Inc.completed its first year of operations with a pretax loss of $800,000.The tax return showed a net operating loss of $750,000,which the company will carryforward.The $50,000 book-tax difference results from a disallowed deduction for meals and entertainment.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:

Fixture

An item of personal property that becomes real property when attached in a permanent manner to real estate.

Ceiling Fan

An electrically powered mechanical fan mounted to the ceiling of a room, used to circulate air and often contribute to cooling.

Fixtures

Personal property that has become so attached to real property that it is legally considered part of the real property; usually, this includes items like heating systems, built-in bookcases, or plumbing.

Real Property

Land and anything permanently attached to it, including buildings and other structures.