Fulton Company computed a pretax financial loss of $18,000 for the first year of its operations ended
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1. Prepare the journal entries necessary to record income tax for the year. The income tax rate is 40%. Assume it is more likely than not that future taxable income will be sufficient to allow for the full realization of any deferred tax assets and that unearned rent revenue is a current liability.
2. If future taxable income from operations was not expected to be sufficient to allow for the full realization of any deferred tax assets, what other sources of income may be considered to determine the need for a valuation allowance?
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