At the Beginning of the Year,Jensen Inc

question 13

Essay

At the beginning of the year,Jensen Inc. ,holds a net operating loss carryforward,and its balance sheet shows a related deferred tax asset of $500,000.At the end of the year,the balance in the deferred tax asset account has not changed,but Jensen's auditors want to record a $100,000 valuation allowance against this amount,because of a persistent downturn in Jensen's profitability.Develop the journal entry to record the valuation allowance.

---

Definitions:

Marginal Tax Rates

The rate at which the last dollar of income is taxed, reflecting the percentage of tax applied to your income for each tax bracket in which you qualify.

Interest Income

Earnings generated from the lending of money or from deposit funds in interest-bearing accounts.

Eligible Dividends

Dividends designated by a corporation to be eligible for a lower tax rate on the dividend income received by an individual shareholder.

Tax Paid

Refers to the total amount of taxes remitted to the relevant tax authorities for income, sales, property, or other forms of taxes.