60.1K

Verified Solution

Link Copied!

The journal entry gives me these options in the dropdown arrow:

No Journal Entry Required Current tax expense Deferred tax asset Deferred tax benefit Deferred tax expense Deferred tax liabilitv Deferred tax expense Deferred tax liability Depreciation Pre-tax loss Valuation allowance Record the deferred tax consequences for recognition of the current year NOL before considering the valuation allowance. Note: Enter debits before credits. Saginaw Inc. completed its first year of operations with a pretax loss of $742,500. The tax return showed a net operating loss of $896,500, which the company will carry forward. The $154,000 book-tax difference results from excess tax depreciation over book depreciation. Management has determined that it should record a valuation allowance equal to the net deferred tax asset. Assuming the current tax expense is zero, prepare the journal entries to record the deferred tax provision and the valuation allowance. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) Required: a. Prepare the journal entry to record the deferred tax consequences for recognition of the current year NOL before considering the valuation allowance. No Journal Entry Required Current tax expense Deferred tax asset Deferred tax benefit Deferred tax expense Deferred tax liabilitv Deferred tax expense Deferred tax liability Depreciation Pre-tax loss Valuation allowance Record the deferred tax consequences for recognition of the current year NOL before considering the valuation allowance. Note: Enter debits before credits. Saginaw Inc. completed its first year of operations with a pretax loss of $742,500. The tax return showed a net operating loss of $896,500, which the company will carry forward. The $154,000 book-tax difference results from excess tax depreciation over book depreciation. Management has determined that it should record a valuation allowance equal to the net deferred tax asset. Assuming the current tax expense is zero, prepare the journal entries to record the deferred tax provision and the valuation allowance. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) Required: a. Prepare the journal entry to record the deferred tax consequences for recognition of the current year NOL before considering the valuation allowance

Answer & Explanation Solved by verified expert

See Answer