have the homework question below. In its books, Ion Corporation reports income tax expense and income tax payable of $200,000 and $250,000, respectively. Assume that Ion only will be able to use $30,000 of any deferred tax asset, with the balance expiring unused. Determine the amount of Ion’s deferred tax asset and any necessary valuation allowance and construct the appropriate journal entry that Ion would record. This is what I have for the answer. Can you please let me know if I am correct or give guidance? likely than not test. Income tax payable – Income tax expense = $250,000 - $200,000 = $50,000 The deferred tax asset is the excess of the income tax expense over income taxes payable. Since only $30,000 of the $50,000 is allowed, the remaining $20,000 will be valuation allowance. The entry to record would be Journal Entries Account titles and explanations Debit Credit Income Tax Expense 200,000 Deferred Tax Asset 50,000 Income Tax Payable 250,000 Income Tax Expense 20,000 Valuation Allowance 20,000 Thanks, Liz
I have the homework question below.
In its books, Ion Corporation reports income tax expense and income tax payable of $200,000 and $250,000, respectively. Assume that Ion only will be able to use $30,000 of any
This is what I have for the answer. Can you please let me know if I am correct or give guidance?
likely than not test.
Income tax payable – Income tax expense =
$250,000 - $200,000 = $50,000
The deferred tax asset is the excess of the income tax expense over income taxes payable.
Since only $30,000 of the $50,000 is allowed, the remaining $20,000 will be valuation allowance. The entry to record would be
|
Journal Entries |
||
|
Account titles and explanations |
Debit |
Credit |
|
Income Tax Expense |
200,000 |
|
|
Deferred Tax Asset |
50,000 |
|
|
Income Tax Payable |
250,000 |
|
|
Income Tax Expense |
20,000 |
|
|
Valuation Allowance |
20,000 |
Thanks,
Liz
Hello,
Yes, the answer provided by you is correct with proper explanation but I am also providing you the solution for further understanding.
Journal entries are prepared to record the financial and non-financial transactions of the business and it has two sides debit and credit which should be always equal.
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