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Pearl Corp. has a deferred tax asset account with a balance of $71,600 at the end of 2024 due to a single cumulative temporary difference of $358,000. At the end of 2025, this same temporary difference has increased to a cumulative amount of $490,000. Taxable income for 2025 is $857,000. The tax rate is 20% for all years. No valuation account related to the deferred tax asset is in existence at the end of 2024. (a) Record income tax expense, deferred income taxes, and income taxes payable for 2025, assuming that it is more likely than not that the deferred tax asset will be realized. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Pearl Corp. has a deferred tax asset account with a balance of $71,600 at the end of 2024 due to a single cumulative temporary difference of $358,000. At the end of 2025, this same temporary difference has increased to a cumulative amount of $490,000. Taxable income for 2025 is $857,000. The tax rate is 20% for all years. No valuation account related to the deferred tax asset is in existence at the end of 2024. (a) Record income tax expense, deferred income taxes, and income taxes payable for 2025, assuming that it is more likely than not that the deferred tax asset will be realized. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

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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Current Attempt in Progress Pearl Corp. has a deferred tax asset account with a balance of $71,600 at the end of 2024 due to a single cumulative temporary difference of $358,000. At the end of 2025, this same temporary difference has increased to a cumulative amount of $490,000. Taxable income for 2025 is $857,000. The tax rate is 20% for all years. No valuation account related to the deferred tax asset is in existence at the end of 2024. (a) Record income tax expense, deferred income taxes, and income taxes payable for 2025, assuming that it is more likely than not that the deferred tax asset will be realized. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit (b) Assuming that it is more likely than not that $26,400 of the deferred tax asset will not be realized, prepare the journal entry at the end of 2025 to record the valuation account. (List debit entry before credit entry. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit
Transcribed Image Text:Current Attempt in Progress Pearl Corp. has a deferred tax asset account with a balance of $71,600 at the end of 2024 due to a single cumulative temporary difference of $358,000. At the end of 2025, this same temporary difference has increased to a cumulative amount of $490,000. Taxable income for 2025 is $857,000. The tax rate is 20% for all years. No valuation account related to the deferred tax asset is in existence at the end of 2024. (a) Record income tax expense, deferred income taxes, and income taxes payable for 2025, assuming that it is more likely than not that the deferred tax asset will be realized. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit (b) Assuming that it is more likely than not that $26,400 of the deferred tax asset will not be realized, prepare the journal entry at the end of 2025 to record the valuation account. (List debit entry before credit entry. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit
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