JMR Corporation Suffered a Loss in 2013

question 90

Multiple Choice

JMR Corporation suffered a loss in 2013.As a result, the Corporation has an $87,000 accumulated tax loss carry forward.The current tax rate is 40%.The benefit was recorded in the accounts, as JMR believed it was more likely than not to be realized.In 2014 the tax rate goes down to 38% and JMR has not yet used the benefit.Which of the following statements is true?

• A)Deferred income tax asset-benefit will not change
• B)Income tax expense should be increased by $1,740
• C)Deferred income tax asset-benefit should be increased by $1,740
• D)No change to the accounts is necessary

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Definitions:

Receivables

Money owed to a company by its customers or other parties, typically from sales of goods or services on credit.

Maturity Value

The amount payable to an investor at the end of a debt instrument's holding period, including principal and interest.

Note Receivable

A written promise to pay a specified amount of money, usually with interest, at a future date; it is recorded as an asset on the balance sheet.

Due Date

The specific date by which a payment must be made or a task must be completed.