XYZ IncIs a Publicly Traded Company

question 76

Multiple Choice

XYZ Inc.is a publicly traded company.At the start of the current year,the company had tax loss carry forwards in the amount of $500,000.This amount increased by $100,000 during the year,due to a change in estimate of the company's future earnings targets.The tax rate for the current year is 25%.The enacted tax rate for future years is 20%.The company uses a valuation allowance account to track its tax loss carry forwards.Which of the following correctly describes the balances in XYZ's internal records at the end of the current year?

• A) Deferred Tax Asset- Carry forward: $100,000 Dr. Valuation Allowance: $20,000 Cr.
• B) Deferred Tax Asset- Carry forward: $125,000 Dr. Valuation Allowance: $25,000 Cr.
• C) Deferred Tax Asset- Carry forward: $100,000 Dr. Valuation Allowance: $20,000 Dr.
• D) Deferred Tax Asset- Carry forward: $125,000 Dr. Valuation Allowance: $25,000 Dr.

---

Definitions:

Positive Descriptions

Refers to expressions or statements that convey favorable qualities or attributes of a subject.

Praise

An expression of approval, commendation, or admiration.

Failures

Instances of not achieving a desired or intended outcome, often used as learning opportunities.

Heteronomous Morality

Piaget’s term for young children’s tendency to define morality in terms of objective consequences and externally imposed controls.