At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $100 million attributable to a temporary book-tax difference of $400 million in a liability for estimated expenses. At the end of 2021, the temporary difference is $304 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2021 is $720 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. ( 1 Journal Entry for - 2021 income taxes. 1 Journal Entry for valuation allowance for the end of 2021.) 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. ( 1 Journal Entry for - 2021 incom
At the end of 2020, Payne Industries had a
Required:
1. Prepare the
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. ( 1 Journal Entry for - 2021 income taxes. 1 Journal Entry for valuation allowance for the end of 2021.)
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