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12- At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $50 million attributable to a temporary book-tax

12- At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $50 million attributable to a temporary book-tax difference of $200 million in a liability for estimated expenses. At the end of 2021, the temporary difference is $144 million. Payne has no other temporary differences. Taxable income for 2021 is $360 million and the tax rate is 25%. Payne has a valuation allowance of $20 million for the deferred tax asset at the beginning of 2021. Required: 1. Prepare the journal entry(s) to record Paynes income taxes for 2021, assuming it is more likely than not that the deferred tax asset will be realized in full.

(A/Record 2021 income taxes.B/ Record valuation allowance for the end of 2021)

2. Prepare the journal entry(s) to record Paynes income taxes for 2021, assuming it is more likely than not that only one-fourth of the deferred tax asset ultimately will be realized.

(A/Record 2021 income taxes. B/Record valuation allowance for the end of 2021)

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