MAC,IncCompleted Its First Year of Operations with a Pretax Loss

question 32

Essay

MAC,Inc.completed its first year of operations with a pretax loss of $300,000.The tax return showed a net operating loss of $500,000,which MAC will carryforward.The $200,000 book-tax difference results from excess tax depreciation over book depreciation.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.

---

Definitions:

Homozygous Dominant

An individual possessing two identical dominant alleles for a particular trait.

Monohybrid Cross

Cross between parents that differ in only one trait.

Phenotypic Ratio

The proportional relationship between the different phenotypes (observable traits) produced by a genetic cross, often expressed in simplest whole numbers.

Heterozygous

Having two different alleles for a specific gene, one inherited from each parent.