At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $40 million attributable to a temporary book-tax difference of $160 million in a liability for estimated expenses. At the end of 2021, the temporary difference is $112 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2021 is $288 million and the tax rate is 25%. Required: 1. Prepare the journal entry(s) to record Payne's income taxes for 2021, assuming it is more likely than not that the deferred tax asset will be realized in full. 2. Prepare the journal entry(s) to record Payne's income taxes for 2021, assuming it is more likely than not that only one-fourth of the deferred tax asset ultimately will be realized. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entry(s) to record Payne's income taxes for 2021, assuming it is more likely than not that the deferred tax asset will be realized in full. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) View transaction list Journal entry worksheet 1 2 > Record 2021 income taxes.
At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $40 million attributable to a temporary book-tax difference of $160 million in a liability for estimated expenses. At the end of 2021, the temporary difference is $112 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2021 is $288 million and the tax rate is 25%. Required: 1. Prepare the journal entry(s) to record Payne's income taxes for 2021, assuming it is more likely than not that the deferred tax asset will be realized in full. 2. Prepare the journal entry(s) to record Payne's income taxes for 2021, assuming it is more likely than not that only one-fourth of the deferred tax asset ultimately will be realized. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entry(s) to record Payne's income taxes for 2021, assuming it is more likely than not that the deferred tax asset will be realized in full. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) View transaction list Journal entry worksheet 1 2 > Record 2021 income taxes.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 8E: Incomc Taxes Then Company has been in operation for several years. It has both a deductible and a...
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Transcribed Image Text:At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $40 million
attributable to a temporary book-tax difference of $160 million in a liability for estimated expenses. At the
end of 2021, the temporary difference is $112 million. Payne has no other temporary differences and no
valuation allowance for the deferred tax asset. Taxable income for 2021 is $288 million and the tax rate is
25%.
Required:
1. Prepare the journal entry(s) to record Payne's income taxes for 2021, assuming it is more likely than not
that the deferred tax asset will be realized in full.
2. Prepare the journal entry(s) to record Payne's income taxes for 2021, assuming it is more likely than not
that only one-fourth of the deferred tax asset ultimately will be realized.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Prepare the journal entry(s) to record Payne's income taxes for 2021, assuming it is more likely than not that the deferred tax asset will
be realized in full. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your
answers in millions (i.e., 10,000,000 should be entered as 10).)
View transaction list
Journal entry worksheet
1
2
>
Record 2021 income taxes.
Note: Enter debits before credits.
Transaction
General Journal
Debit
Credit
1
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