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Exercise 16-32 (Algo) Tax credit; uncertain tax position (L016-9] Delta Catfish Company has taken a position in its tax return to claim a tax credit of $90 million (direct reduction in taxes payable) and has determined that its sustainability is "more likely than not," based on its technical merits. Delta has developed the probability table shown below of all possible material outcomes: Probability Table ($ in millions) Amount of the tax benefit that management expects to receive Percentage likelihood that the tax benefit will be sustained at this level $90 10% $90 20% $88 25% $ 76 20% $74 25% Delta's taxable income is $388 million for the year. Its effective tax rate is 25%. The tax credit would be a direct reduction in current taxes payable. Required: 1. At what amount would Delta measure the tax benefit in its income statement? 2. Prepare the appropriate journal entry for Delta to record its income taxes for the year. Complete this question by entering your answers in the tabs below. Required 1 Required 2 At what amount would Delta measure the tax benefit in its income statement? (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) Tax benefit million Delta Catfish Company has taken a position in its tax return to claim a tax credit of $90 million (direct reduction in taxes payable) and has determined that its sustainability is "more likely than not," based on its technical merits. Delta has developed the probability table shown below of all possible material outcomes: Probability Table ($ in millions) Amount of the tax benefit that management expects to receive Percentage likelihood that the tax benefit will be sustained at this level $90 108 $ 90 208 $88 25% $76 $ 74 20% 25% Delta's taxable income is $388 million for the year. Its effective tax rate is 25%. The tax credit would be a direct reduction in current taxes payable. Required: 1. At what amount would Delta measure the tax benefit in its income statement? 2. Prepare the appropriate journal entry for Delta to record its income taxes for the year. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the appropriate journal entry for Delta to record its income taxes for the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 5,500,000 should be entered as 5.5).) View transaction list Journal entry worksheet Record income taxes. Note: Enter debits before credits. Event General Journal Debit Credit 1 Exercise 16-25 (Algo) Net operating loss carryback and carryforward (L016-7] Wynn Farms reported a net operating loss of $220,000 for financial reporting and tax purposes in 2021. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Wynn's first four years of operation were as follows: Income Taxes Paid 2017 2018 2019 2020 Taxable Income $ 72,000 82,000 140,000 40,000 Tax Rates 30% 30 40 45 $21,600 24,600 56,000 18,000 Required: 1. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm- related businesses. Assume Wynn is one of those businesses. Complete the table given below and prepare the journal entry to recognize the income tax benefit of the net operating loss. 2. Show the lower portion of the 2021 income statement that reports the income tax benefit of the net operating loss. X Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Calculation Required 1 G) Required 2 NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm- related businesses. Assume Wynn is one of those businesses. Complete the following table to recognize the income tax benefit of the net operating loss. (Enter your answers in whole dollars. Leave no cell blank, enter "0" wherever applicable. Enter all amounts as positive values.) Show less Operating loss carryback Tax $ Recorded as: Rate % 30% = $ 0 $ 0 0 x 30% $ 0 140,000 x 40% = $ 56,000 Carried back - 2017 Carried back - 2018 Carried back - 2019 Carried back - 2020 Total carryback Operating loss carryforward Carried forward Missing * 45% = $ 56,000 Receivable-income tax refund Missing * 25% = Deferred tax asset-ending Required 1 Calculation Required 1 GJ > Exercise 16-25 (Algo) Net operating loss carryback and carryforward (LO16-7] Wynn Farms reported a net operating loss of $220,000 for financial reporting and tax purposes in 2021. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Wynn's first four years of operation were as follows: 2017 2018 2019 2020 Taxable Income $ 72,000 82,000 140,000 40,000 Tax Rates 30% 30 40 45 Income Taxes Paid $21,600 24,600 56,000 18,000 Required: 1. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm- related businesses. Assume Wynn is one of those businesses. Complete the table given below and prepare the journal entry to recognize the income tax benefit of the net operating loss. 2. Show the lower portion of the 2021 income statement that reports the income tax benefit of the net operating loss. Answer is not complete. Complete this question by entering your answers in abs below. Required 1 Calculation Required 1 GJ Required 2 Prepare the journal entry to recognize the income tax benefit of the net operating loss. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) No Event General Journal Debit Credit 1 1 Receivable-Income tax refund Deferred tax asset Income tax expense Wynn Farms reported a net operating loss of $220,000 for financial reporting and tax purposes in 2021. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Wynn's first four years of operation were as follows: 2017 2018 2019 2020 Taxable Income $ 72,000 82,000 140,000 40,000 Tax Rates 308 30 40 45 Income Taxes Paid $21,600 24,600 56,000 18,000 Required: 1. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm- related businesses. Assume Wynn is one of those businesses. Complete the table given below and prepare the journal entry to recognize the income tax benefit of the net operating loss. 2. Show the lower portion of the 2021 income statement that reports the income tax benefit of the net operating loss. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Calculation Required 1 GJ Required 2 Show the lower portion of the 2021 income statement that reports the income tax benefit of the net operating loss. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in whole dollars.) $ (220,000) Operating loss before income taxes Income tax benefit: Tax savings from NOL carryforward Tax refund from NOL carryback 0 (220,000) Net loss $