At the end of 2023, Payne Industries had a deferred tax asset account with a balance of $70 million attributable to a temporary book- tax difference of $280 million in a liability for estimated expenses. At the end of 2024, the temporary difference is $208 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2024 is $504 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. Answer is complete but not entirely correct. 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 only one-fourth of the deferred tax asset ultimately will be realized. 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). No 1 Transaction 1 General Journal Income tax expense Deferred tax asset Income tax payable 2 2 Income tax expense Valuation allowance Show less▲ Debit 144 Credit 28 × 18 126 28 ×
At the end of 2023, Payne Industries had a deferred tax asset account with a balance of $70 million attributable to a temporary book- tax difference of $280 million in a liability for estimated expenses. At the end of 2024, the temporary difference is $208 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2024 is $504 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. Answer is complete but not entirely correct. 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 only one-fourth of the deferred tax asset ultimately will be realized. 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). No 1 Transaction 1 General Journal Income tax expense Deferred tax asset Income tax payable 2 2 Income tax expense Valuation allowance Show less▲ Debit 144 Credit 28 × 18 126 28 ×
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 9MC: Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and...
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Transcribed Image Text:At the end of 2023, Payne Industries had a deferred tax asset account with a balance of $70 million attributable to a temporary book-
tax difference of $280 million in a liability for estimated expenses. At the end of 2024, the temporary difference is $208 million. Payne
has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2024 is $504 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.
Answer is complete but not entirely correct.
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 only one-fourth
of the deferred tax asset ultimately will be realized.
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).
No
1
Transaction
1
General Journal
Income tax expense
Deferred tax asset
Income tax payable
2
2
Income tax expense
Valuation allowance
Show less▲
Debit
144
Credit
28 ×
18
126
28 ×
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