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At the end of the preceding year,  JP Motors had a deferred tax asset of $14,750,000, attributable to its only temporary difference of $59,000,000 for estimated expenses. At the end of the current year, the temporary difference is $54,000,000. At the beginning of the year there was no valuation account for the deferred tax asset. At year-end, JP Motors now estimates that it is more likely than not that one-third of the deferred tax asset will never be realized. Taxable income is $12,900,000 for the current year and the tax rate is 25% for all years.   Required: Prepare journal entries to record JP Motors' income tax expense for the current year.

At the end of the preceding year,  JP Motors had a deferred tax asset of $14,750,000, attributable to its only temporary difference of $59,000,000 for estimated expenses. At the end of the current year, the temporary difference is $54,000,000. At the beginning of the year there was no valuation account for the deferred tax asset. At year-end, JP Motors now estimates that it is more likely than not that one-third of the deferred tax asset will never be realized. Taxable income is $12,900,000 for the current year and the tax rate is 25% for all years.   Required: Prepare journal entries to record JP Motors' income tax expense for the current year.

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 the preceding year,  JP Motors had a deferred tax asset of $14,750,000, attributable to its only temporary difference of $59,000,000 for estimated expenses. At the end of the current year, the temporary difference is $54,000,000. At the beginning of the year there was no valuation account for the deferred tax asset. At year-end, JP Motors now estimates that it is more likely than not that one-third of the deferred tax asset will never be realized. Taxable income is $12,900,000 for the current year and the tax rate is 25% for all years.

 

Required:

Prepare journal entries to record JP Motors' income tax expense for the current year.

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