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. Paynehas no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2021 is $720 million andthe 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 assetwill 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 thedeferred tax asset ultimately will be realized.Complete this question by entering your answers in the tabs below.Required 1 Required 2Prepare the journal entry(s) to record Payne's income taxes for 2021, assuming it is more likely than not that only one-fourth of thedeferred tax asset ultimately will be realized. (If no entry is required for a transaction/event, select "No journal entry required" in thefirst account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)View transaction list1 Record 2021 income taxes.2 Record valuation allowance for the end of 2021.Note : = journal entry has been enteredRecord entryClear entryXCreditView 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. Paynehas no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2021 is $720 million andthe 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 assetwill 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 thedeferred tax asset ultimately will be realized.Complete this question by entering your answers in the tabs below.Required 1 Required 2Prepare the journal entry(s) to record Payne's income taxes for 2021, assuming it is more likely than not that the deferred tax asset willbe realized in full. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter youranswers in millions (i.e., 10,000,000 should be entered as 10).)View transaction list1Record 2021 income taxes.2 Record valuation allowance for the end of 2021.Note := journal entry has been enteredRecord entryClear entryXCreditView general journal>

Solution: As temporary difference related to liability for estimated expenses decreased during the…

Answered: At the end of 2020, Payne Industries…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $75 million attributable to a temporary book- tax difference of $300 million in a liability for estimated expenses. At the end of 2021, the temporary difference is $224 million. Payne has no other temporary differences. Taxable income for 2021 is $540 million and the tax rate is 25% Payne has a valuation allowance of $30 million for the deferred tax asset at the beginning of 2021. 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. Journal entry worksheet Record 2021 income taxes. Record valuation allowance for the end of 2021. 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,…
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At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $80 million attributable to a temporary book-tax difference of $320 million in a liability for estimated expenses. At the end of 2021, the temporary difference is $240 million. Payne has no other temporary differences. Taxable income for 2021 is $576 million and the tax rate is 25%. Payne has a valuation allowance of $32 million for the deferred tax asset at the beginning of 2021. 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.At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $80 million attributable to a temporary book-tax difference of $320 million in a…
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ABC Corporation prepared the following reconciliation for its first year of operations:· Pretax financial income for 2020- P1,200,000· Tax exempt interest- P100,000· Taxable temporary difference - P300,000The temporary difference will reverse evenly over the next two years at an enacted tax rate of 40%. The enacted tax rate for 2020 is 28%. What amount should be reported in its 2020 income statement as the current portion of its provision for income taxes?
At the end of 2023, Payne Industries had a deferred tax asset account with a balance of $110 million attributable to a temporary book- tax difference of $440 million in a liability for estimated expenses. At the end of 2024, the temporary difference is $336 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2024 is $792 million and the tax rate is 25%. Required: 1. Prepare the journal entry(s) to record Payne's income taxes for 2024, 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 2024, 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 2024, assuming it is more likely than not that the deferred…
Concord Construction Company changed from the completed-contract to the percentage-of-completion method of accounting for long-term construction contracts during 2021. For tax purposes, the company employs the completed-contract method and will continue this approach in the future. (Hint: Adjust all tax consequences through the Deferred Tax Liability account.) The appropriate information related to this change is as follows. Pretax Income from: Percentage-of-Completion Completed-Contract Difference 2020 $747,000 $539,000 $208,000 2021 673,000 468,000 205,000 (a) Assuming that the tax rate is 30%, what is the amount of net income that would be reported in 2021?
At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $125 million attributable to a temporary book-tax difference of $500 million in a liability for estimated expenses. At the end of 2021, the temporary difference is $384 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2021 is $900 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.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.
At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $90 million attributable to a temporary book-tax difference of $360 million in a liability for estimated expenses. At the end of 2021, the temporary difference is $272 million. Payne has no other temporary differences. Taxable income for 2021 is $648 million and the tax rate is 25%. Payne has a valuation allowance of $36 million for the deferred tax asset at the beginning of 2021. Required: 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. 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.

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