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. 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.
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. 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.
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 12P: Comprehensive Colt Company reports pretax financial income of 143,000 in 2019. In addition to pretax...
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![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.
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 only one-fourth of the
deferred tax asset ultimately will be realized. (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
1 Record 2021 income taxes.
2 Record valuation allowance for the end of 2021.
Note : = journal entry has been entered
Record entry
Clear entry
X
Credit
View general journal
>](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe890579c-94a4-423d-91dd-4fb21feea66a%2Fdf6abb6f-d355-4f5e-a330-106461455975%2Fles95xd_processed.png&w=3840&q=75)
Transcribed Image Text: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.
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 only one-fourth of the
deferred tax asset ultimately will be realized. (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
1 Record 2021 income taxes.
2 Record valuation allowance for the end of 2021.
Note : = journal entry has been entered
Record entry
Clear entry
X
Credit
View general journal
>
![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.
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
1
Record 2021 income taxes.
2 Record valuation allowance for the end of 2021.
Note :
= journal entry has been entered
Record entry
Clear entry
X
Credit
View general journal
>](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe890579c-94a4-423d-91dd-4fb21feea66a%2Fdf6abb6f-d355-4f5e-a330-106461455975%2Femasnl_processed.png&w=3840&q=75)
Transcribed Image Text: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.
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
1
Record 2021 income taxes.
2 Record valuation allowance for the end of 2021.
Note :
= journal entry has been entered
Record entry
Clear entry
X
Credit
View general journal
>
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