Question
At the end of the preceding year, World Industries had a deferred tax asset of $14,000,000, attributable to its only temporary difference of $43,000,000 for
At the end of the preceding year, World Industries had a deferred tax asset of $14,000,000, attributable to its only temporary difference of $43,000,000 for estimated expenses. At the end of the current year, the temporary difference is $38,000,000. At the beginning of the year there was no valuation account for the deferred tax asset. At year-end, World Industries now estimates that it is more likely than not that one-third of the deferred tax asset will never be realized. Taxable income is $11,300,000 for the current year and the tax rate is 30% for all years. |
Required: |
Prepare journal entries to record World Industries' income tax expense for the current year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) |
Record the income taxes.
Record valuation allowance for the year end.
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