At the end of 2023, Payne Industries had a deferred tax asset account with a balance of $55 million attributable to a temporary book- tax difference of $220 million in a liability for estimated expenses. At the end of 2024, the temporary difference is $160 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2024 is $396 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.
At the end of 2023, Payne Industries had a deferred tax asset account with a balance of $55 million attributable to a temporary book- tax difference of $220 million in a liability for estimated expenses. At the end of 2024, the temporary difference is $160 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2024 is $396 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.
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter3: Taxes On The Financial Statements
Section: Chapter Questions
Problem 2P
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