Saginaw Incorporated completed its first year of operations with a pretax loss of $500,000. The tax return showed a net operating loss of $600,000, which the company will carry forward. The $100,000 book-tax difference results from an increase in taxable temporary differences (i.e., excess tax depreciation over book depreciation). Management has determined that it should record a valuation allowance equal to the net deferred tax asset. Assume the current tax expense is zero. Note: 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. b. Prepare the journal entry to record the deferred tax consequences of the depreciation book-tax difference. c. Prepare the journal entry to record the deferred tax consequences of the valuation allowance. View transaction list Journal entry worksheet 1 2 Record the deferred tax consequences for recognition of the current year NOL before considering the valuation allowance. Transaction a 3 Note: Enter debits before credits. General Journal Debit Credit
Saginaw Incorporated completed its first year of operations with a pretax loss of $500,000. The tax return showed a net operating loss of $600,000, which the company will carry forward. The $100,000 book-tax difference results from an increase in taxable temporary differences (i.e., excess tax depreciation over book depreciation). Management has determined that it should record a valuation allowance equal to the net deferred tax asset. Assume the current tax expense is zero. Note: 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. b. Prepare the journal entry to record the deferred tax consequences of the depreciation book-tax difference. c. Prepare the journal entry to record the deferred tax consequences of the valuation allowance. View transaction list Journal entry worksheet 1 2 Record the deferred tax consequences for recognition of the current year NOL before considering the valuation allowance. Transaction a 3 Note: Enter debits before credits. General Journal Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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![Saginaw Incorporated completed its first year of operations with a pretax loss of $500,000. The tax return showed a net operating loss
of $600,000, which the company will carry forward. The $100,000 book-tax difference results from an increase in taxable temporary
differences (i.e., excess tax depreciation over book depreciation). Management has determined that it should record a valuation
allowance equal to the net deferred tax asset. Assume the current tax expense is zero.
Note: 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.
b. Prepare the journal entry to record the deferred tax consequences of the depreciation book-tax difference.
c. Prepare the journal entry to record the deferred tax consequences of the valuation allowance.
View transaction list
Journal entry worksheet
1
2
Record the deferred tax consequences for recognition of the current year NOL
before considering the valuation allowance.
Transaction
a
3
Note: Enter debits before credits.
General Journal
Debit
Credit
>](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0eb885d2-153c-4058-8b96-7f14bc158e09%2F6c64af3e-cc98-4922-be23-7aa06b3d4f7b%2Flr5o8x2n_processed.png&w=3840&q=75)
Transcribed Image Text:Saginaw Incorporated completed its first year of operations with a pretax loss of $500,000. The tax return showed a net operating loss
of $600,000, which the company will carry forward. The $100,000 book-tax difference results from an increase in taxable temporary
differences (i.e., excess tax depreciation over book depreciation). Management has determined that it should record a valuation
allowance equal to the net deferred tax asset. Assume the current tax expense is zero.
Note: 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.
b. Prepare the journal entry to record the deferred tax consequences of the depreciation book-tax difference.
c. Prepare the journal entry to record the deferred tax consequences of the valuation allowance.
View transaction list
Journal entry worksheet
1
2
Record the deferred tax consequences for recognition of the current year NOL
before considering the valuation allowance.
Transaction
a
3
Note: Enter debits before credits.
General Journal
Debit
Credit
>
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