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Miche Miche
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4 years ago
Violet Corporation reported a loss in 2015 of $700,000. The company reported taxable income of $280,000 in 2013 and $205,000 in 2014. It has no permanent or temporary differences and its tax rate is 40%.

Refer to Violet Corporation.  What is the necessary journal entry for 2015?

A)
Income Tax Refund Receivable280,000
         Income Tax Payable194,000
         Deferred Tax Asset86,000

B)
Income Tax Refund Receivable194,000
Deferred Tax Asset86,000
         Income Tax Benefit280,000

C)
Income Tax Refund Receivable194,000
         Deferred Tax Asset194,000

D)
Deferred Tax Asset280,000
         Income Tax Benefit280,000
Textbook 
Intermediate Accounting

Intermediate Accounting


Edition: 1st
Authors:
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kiara23247843kiara23247843
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4 years ago
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 B
Explanation:  Income Tax Refund Receivable is 2013 and 2014 income times the tax rate (280,000 + 205,000)  40%. The Income Tax Benefit is the loss times the tax rate (700,000  40%) and the Deferred Tax Asset is the difference.

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Miche Author
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4 years ago
Above and beyond my expectations for this site
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