Prepare the entries for income tax expense

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Reference no: EM132029944

Problem - The Amarillo Corporation reported the following income for both accounting and tax purposes:

Year

Pretax Income

Enacted Tax Rates

2011

$120,000

25%

2012

80,000

28%

2013

100,000

30%

2014

(360,000)

30%

Amarillo Corporation uses the carryback provision for net operating losses when possible. The enacted tax rate for 2014 and future years is 30%. Company management believes that based on an evaluation of the positive and negative evidence that at the end of 2014 it is more likely than not that 40% of any deferred tax asset will not be realized.

Required -

a) Prepare the entries for income tax expense/benefit and any related assets and liabilities for the Amarillo Corporation for 2014.

b) What is the total amount of income tax expense/benefit the company would report in the income statement for 2014?

Reference no: EM132029944

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