At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $35 million attributable to a temporary book-tax difference of $140 million in a liability for estimated expenses. At the end of 2021, the temporary difference is $96 million. Paynehas no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2021 is $252 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.

INTRODUCTION: Each journal entry provides information relevant to a particular business transaction,…

Answered: At the end of 2020, Payne Industries…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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,…
Godo
At 30 June 2019, ABC Ltd had the following deferred tax balances: Deferred tax liability $18,000 Deferred tax asset 15,000Beta Ltd recorded a profit before tax of $80,000 for the year to 30 June 2020, which included the following items:Depreciation expense – plant Doubtful debts expense Long-service leave expense$7,000 3,000 4,000For taxation purposes the following amounts are allowable deductions for the year to 30 June 2020:Tax depreciation – plant $8,000 Bad debts written off 2,000Depreciation rates for taxation purposes are higher than for accounting purposes. A corporate tax rate of 30% applies.Required:a) Determine the taxable income and income tax payable for the year to 30 June 2020.b) Determine by what amount the balances of the deferred liability and deferred tax asset will increase or decrease for the year to 30 June 2020 because of depreciation, doubtful debts and long-service leave.c) Prepare the necessary journal entries to account for income tax assuming recognition…
Vishnu
*see attached problem REQUIRED: What is the deferred tax balance by the end of 2020?
Callaway Corp. has a deferred tax asset account with a balance of $150,000 at the end of 2017 due to a single cumulative temporary difference of $375,000. At the end of 2018, this same temporary difference has increased to a cumulative amount of $500,000. Taxable income for 2018 is $850,000. The tax rate is 40% for all years.Instructions(a) Record income tax expense, deferred income taxes, and income taxes payable for 2018, assuming that it is probable that the deferred tax asset will be realized.(b) Assuming that it is probable that $30,000 of the deferred tax asset will not be realized, prepare the journal entry at the end of 2018 to recognize this probability.
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…
Brown Corp has a deferred tax asset account with balance of $80,000 at the end of 2019 due to a single cumulative temporary difference of $350,000. At the end of 2020, this same temporary difference has increased to cumulative amount of $410,000. Taxable income for 2020 is $800,000. The tax rate is 25% for all years. No valuation account related to the deferred tax asset is in existence at the end of 2019. What one of the following is correct about the journal entry to record Brown's 2020 income tax expense? Group of answer choices Dr. Deferred tax asset $15,000 Dr. Deferred tax liability $25,000 Dr. Income tax expense $200,000 Cr. Tax payable $112,000
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At the beginning of 2020, Wertz Construction Company changed from the completed-contract method to recognizing revenue over time (percentage-of-completion) for financial reporting purposes. The company will continue to use the completed- contract method for tax purposes. For years prior to 2020, pretax income under the two methods was as follows: percentage-of- completion $120,000, and completed-contract $80,000. The tax rate is 20%. Prepare Wertz's 2020 journal entry to record the change in accounting principle.
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What is the amount of net income after tax that Vignette Company should report for the year 2021? Vignette Construction Company changed from completed contract method 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. The appropriate information related to this change is as follows: Pre-tax Income from Percentage of Completion 2020 2,028,000 1,820,000 Completed Contract 1,534,000 1,248,000 2021 Income tax rate is 35%. What is the amount of net income after tax that Vignette Company should report for the year 2021? Your answer

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