JR Company Incurred a Loss in 2011, Due in Part

question 56

Multiple Choice

JR Company incurred a loss in 2011, due in part to a fire at one of its plants.The deferred benefit of a loss carry forward was not recognized in the year as the probability of realization was less than 50%.In 2012, JR Company incurred a small loss, but due to large contracts upcoming, it was determined that the probability of realization was greater than 50%.The tax rate for 2011 was 40% and 2012 45%.JR Company should:

• A)Record the deferred income tax benefit for 2011 only.
• B)Record the deferred income tax benefit for both years using the 45% rate.
• C)Record the deferred income tax benefit for 2012 only.
• D)Record the deferred income tax benefit for both years using the 40% rate.

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Definitions:

Behaviour

Actions or reactions of an individual in response to external or internal stimuli.

Lesioning

A technique in neurological and psychological studies where specific brain areas are deliberately damaged or removed to study their function.

Electrical Stimulation

The use of electrical impulses to stimulate nerves or muscles for therapeutic purposes.

Nervous System

The complex network of nerve cells and fibers that transmits nerve impulses between parts of the body, coordinating voluntary and involuntary actions.