the end of 2020, Payne Industries had a deferred tax asset account with a balance of $65 million attributable to a temporary book-tax difference of $260 million in a liability for estimated expenses. At the end of 2021, the temporary difference is $192 million. Payne has no other temporary differences. Taxable income for 2021 is $468 million and the tax rate is 25%. Payne has a valuation allowance of $26 million for the deferred tax asset at the beginning of 2021.
At the end of 2020, Payne Industries had a
Payne has a valuation allowance of $26 million for the deferred tax asset at the beginning of 2021.
Required:
1. Prepare the
2. Prepare the journal entry(s) to record Payne’s income taxes for 2021, assuming it is more likely than not that only one-fourth of the deferred tax asset ultimately will be realized.
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