At the end of 2023, Payne Industries had a deferred tax asset account with a balance of $120 million attributable to a temporary book-tax difference of $480 million in a liability for estimated expenses. At the end of 2024, the temporary difference is $368 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable Income for 2024 Is $864 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.
At the end of 2023, Payne Industries had a deferred tax asset account with a balance of $120 million attributable to a temporary book-tax difference of $480 million in a liability for estimated expenses. At the end of 2024, the temporary difference is $368 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable Income for 2024 Is $864 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Exercise 16-12 (Algo) Deferred tax asset; taxable Income given; valuation allowance [LO16-4]
At the end of 2023, Payne Industries had a deferred tax asset account with a balance of $120 million
attributable to a temporary book-tax difference of $480 million in a liability for estimated expenses. At the
end of 2024, the temporary difference is $368 million. Payne has no other temporary differences and no
valuation allowance for the deferred tax asset. Taxable Income for 2024 Is $864 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 tax asset will
be realized in full.
Note: 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
Journal entry worksheet
<
1
2
Record 2024 income taxes.
Note: Enter debits before credits.
Transaction
General Journal
Debit
Credit
Record entry
Clear entry
View general journal
Show less A](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1a6dff2a-a390-46e3-ad39-00533c1367d9%2F505f0502-89bf-43a4-8815-d6ff94357517%2Fk0ln25f_processed.png&w=3840&q=75)
Transcribed Image Text:Exercise 16-12 (Algo) Deferred tax asset; taxable Income given; valuation allowance [LO16-4]
At the end of 2023, Payne Industries had a deferred tax asset account with a balance of $120 million
attributable to a temporary book-tax difference of $480 million in a liability for estimated expenses. At the
end of 2024, the temporary difference is $368 million. Payne has no other temporary differences and no
valuation allowance for the deferred tax asset. Taxable Income for 2024 Is $864 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 tax asset will
be realized in full.
Note: 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
Journal entry worksheet
<
1
2
Record 2024 income taxes.
Note: Enter debits before credits.
Transaction
General Journal
Debit
Credit
Record entry
Clear entry
View general journal
Show less A
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