Question
Corning-Howell reported taxable income in 2016 of $270 million. At December 31, 2016, the reported amount of some assets and liabilities in the financial statements
Corning-Howell reported taxable income in 2016 of $270 million. At December 31, 2016, the reported amount of some assets and liabilities in the financial statements differed from their tax bases as indicated below: Carrying Amount Tax Basis Assets Current Net accounts receivable $ 15 million $ 20 million Prepaid insurance 51 million 0 Prepaid advertising 6 million 0 Noncurrent Investments at fair value with changes in OCI* 8 million 0 Buildings and equipment (net) 520 million 400 million Liabilities Current Liabilitysubscriptions received 30 million 0 Long-term Liabilitypostretirement benefits 665 million 0 *Gains and losses taxable when investments are sold. The total deferred tax asset and deferred tax liability amounts at January 1, 2016, were $300 million and $70 million, respectively. The enacted tax rate is 40% each year.
Required: 1. Determine the total deferred tax asset and deferred tax liability amounts at December 31, 2016. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
2. Determine the increase (decrease) in the deferred tax asset and deferred tax liability accounts at December 31, 2016. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Negative amounts should be indicated with a minus sign.)
3. Determine the income tax payable currently for the year ended December 31, 2016. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
4. Prepare the journal entry to record income taxes for 2016. (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., 10,000,000 should be entered as 10).)
5. Show how the deferred tax amounts should be classified and reported in the 2016 balance sheet. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
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