Lafayette, Inc

question 14

Essay

Lafayette, Inc., completed its first year of operations with a pretax loss of $800,000. The tax return showed a net operating loss of $750,000. The $50,000 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:

Chemical Communication

The use of chemical substances to convey information among organisms, including pheromones and neurotransmitters.

Nervous System

The network of nerve cells and fibers that transmits nerve impulses between parts of the body, coordinating its actions and sensory information.

Sympathetic Nervous System

Part of the autonomic nervous system that prepares the body for fast action in situations perceived as stressful or dangerous, often known as the "fight or flight" response.

Stimulates Digestion

The process or action that encourages the digestive system to break down food more effectively, potentially through the release of digestive enzymes or the promotion of gut motility.