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?