Lafayette, Incorporated, Completed Its First Year of Operations with a Pretax

question 124

Essay

Lafayette, Incorporated, completed its first year of operations with a pretax loss of $807,600. The tax return showed a net operating loss of $765,200. The $42,400 book-tax difference results from a disallowed deduction for business-related meals. Management has determined that they should record a valuation allowance equal to the net deferred tax asset. Prepare the journal entries to record the deferred tax provision and the valuation allowance.

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Definitions:

Abdominal Region

An area of the body below the chest containing vital organs like the stomach, liver, and intestines.

Landmarks

Recognizable natural or artificial features used for navigation, often considered significant for historical, geographical, or cultural reasons.

Physical Principles

The foundational laws and concepts that govern the physical world, including mechanics, thermodynamics, and electromagnetism.

Prevent Injury

The act of taking precautions to avoid accidents or harm to oneself or others.