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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A: Introduction:Journal entries should not be used to record routine transactions such as customer…

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A: A journal entry is a record of a transaction or event that is entered into a company's accounting…

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A: Taxable income  = Pretax financial income - Excess of depreciation as per tax over booksIncome tax…

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A: When the tax paid (as per the tax code) is less than the tax calculated in the income statement (as…

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Q: Feagler Company's current income taxes payable related to its taxable income for 2020 is $460,000.…

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A: Journal Entry: A journal entry refers to the logging of a operations into accounting items of…

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A: Introduction: Journal entries should not be used to record routine transactions such as customer…

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A: Compute the amounts to record income tax as follows: Result:

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A: Deferred tax is a notional asset or liability to reflect corporate income taxation on a basis that…

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A: Solution:-a The following journal entry required for record income tax payable, income tax expense…

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A: A journal entry is utilized to record a business deal in a company's accounting records. A journal…

Q: At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $45 million…

A: The temporary difference will create a Deferred tax asset. In the first case Valuation Allowance…

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Q: At the end of 2017, Payne Industries had a deferred tax asset account with a balance of $30 million…

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Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.