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At the end of 2023, Payne Industries had a deferred tax asset account with a balance of $55 million attributable to a temporary book- tax difference of $220 million in a liability for estimated expenses. At the end of 2024, the temporary difference is $160 million. Payne has no other temporary differences. Taxable income for 2024 is $396 million and the tax rate is 25%. Payne has a valuation allowance of $22 million for the deferred tax asset at the beginning of 2024. 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.

At the end of 2023, Payne Industries had a deferred tax asset account with a balance of $55 million attributable to a temporary book- tax difference of $220 million in a liability for estimated expenses. At the end of 2024, the temporary difference is $160 million. Payne has no other temporary differences. Taxable income for 2024 is $396 million and the tax rate is 25%. Payne has a valuation allowance of $22 million for the deferred tax asset at the beginning of 2024. 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.

FINANCIAL ACCOUNTING
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 2023, Payne Industries had a deferred tax asset account with a balance of $55 million attributable to a temporary book- tax difference of $220 million in a liability for estimated expenses. At the end of 2024, the temporary difference is $160 million. Payne has no other temporary differences. Taxable income for 2024 is $396 million and the tax rate is 25%. Payne has a valuation allowance of $22 million for the deferred tax asset at the beginning of 2024. 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 the income taxes for 2024. Note: Enter debits before credits. Transaction Record entry General Journal Clear entry < Required 1 Debit Credit View general journal Required 2 > > Show less A
Transcribed Image Text:At the end of 2023, Payne Industries had a deferred tax asset account with a balance of $55 million attributable to a temporary book- tax difference of $220 million in a liability for estimated expenses. At the end of 2024, the temporary difference is $160 million. Payne has no other temporary differences. Taxable income for 2024 is $396 million and the tax rate is 25%. Payne has a valuation allowance of $22 million for the deferred tax asset at the beginning of 2024. 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 the income taxes for 2024. Note: Enter debits before credits. Transaction Record entry General Journal Clear entry < Required 1 Debit Credit View general journal Required 2 > > Show less A
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