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.

Question

Quizplus · Accepted Answer

The Answer of 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.

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