JMR Corporation Suffered a Loss in 2013

question 87

Multiple Choice

JMR Corporation suffered a loss in 2013.As a result, the Corporation has a $87,000 accumulated tax loss carry forward at the tax rate of 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 up to 45% and JMR has not yet used the benefit.Which of the following statements is true?

• A)Deferred income tax asset-benefit should be increased by $1,740
• B)No change to the accounts is necessary
• C)Income tax expense should be increased by $1,740
• D)Income tax expense should be decreased by $4,350

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Definitions:

Price Increase

is the rise in the selling price of goods or services, often due to factors like inflation, increased production costs, or higher demand.

Traceable Fixed Expense

Fixed costs that can be directly associated with a specific segment, product line, or department within a company.

Net Operating Income

A company's income after operating expenses have been deducted, but before interest and taxes.

Current Price

Refers to the present market value of a product, security, or commodity.