Answer:
Dr Deferred Tax Liability $3,750,000
Cr Income Tax Benefit-Operating Loss $3,750,000
Explanation:
Based on the information given we were told that net operating loss of the amount of $15 million was reported for financial reporting and tax purposes in which the tax rate is 25%. Therefore the journal entry to recognize the income tax benefit of the net operating loss will be :
Dr Deferred Tax Liability $3,750,000
Cr Income Tax Benefit-Operating Loss $3,750,000
($15 million *25%)
