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Hello, So I am working through this question and I got the wrong answer for the valuation allowance although I don't understand why I am
Hello, So I am working through this question and I got the wrong answer for the valuation allowance although I don't understand why I am wrong! I worked my deferred tax asset doing the following:
800,000-500,000= 300,000
and then I multiplied 300,000 * 35% = 105,000 (That was correct) Then I was working the Valuation Allowance, and I did the following:
105,000 * 35%= 36750 and that was a (wrong answer) Can you please explain to me why is it wrong and what is the correct answer!
Thank you.
C-HW#11 Saved Help Save & Exit Submit Check my work 13 In Figland Company's first year of operations (2017), the company had pre-tax book income of $500,000 and taxable income of $800,000. Figland's only temporary difference is for accrued product warranty costs, which are expected to be paid as follows 0.8 points 2018 2019 $100,000 $200,000 The enacted income tax rate is 35%. Figland believes there is a high likelihood that one-third of the tax benefit associated with the future deductible amounts will not be realized eBook Required: Compute the amount of deferred tax asset and related valuation allowance that would be reported in Figland's 2017 tax note Print Deferred tax asset Valuation allowance Net deferred asset S 105,000 36,750 $ 68,250 Mc Graw Hill Prey 13 of 15 | Next>Step by Step Solution
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