Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Exercise 16-12 (Algo) Deferred tax asset; taxable income given; valuation allowance (L016-4) At the end of 2020, Payne Industries had a deferred tax asset account

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Exercise 16-12 (Algo) Deferred tax asset; taxable income given; valuation allowance (L016-4) At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $110 million attributable to a temporary book-tax difference of $440 million in a liability for estimated expenses. At the end of 2021, the temporary difference is $336 million, Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2021 is $792 million and the tax rate is 25%. Required: 1. Prepare the journal entry(s) to record Payne's income taxes for 2021, 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 2021, assuming it is more likely than not that only one- fourth of the deferred tax asset ultimately will be realized, Record 2021 income taxes. Note: Enter debits before credits. Transaction General Journal Debit Credit Record valuation allowance for the end of 2021. Note: Enter debits before credits. General Journal Debit Credit Transaction 2 ed 1 Required 2 the journal entry(s) to record Payne's income taxes for 2021, assuming it is more likely than not tha d tax asset ultimately will be realized. (If no entry is required for a transaction/event, select "No journ count field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) transaction list urnal entry worksheet 1 2 > acord 2021 income taxes. Required 1 Required 2 Prepare the journal entry(s) to record Payne's income taxes for 2021, assuming it is more likely deferred tax asset ultimately will be realized. (If no entry is required for a transaction/event, se first account field. Enter your answers in millions (.e., 10,000,000 should be entered as 10).) View transaction list Journal entry worksheet Record valuation allowance for the end of 2021

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Audit Guide Government Auditing Standards And Single Audits

Authors: AICPA

1st Edition

1945498447, 978-1945498442

More Books

Students also viewed these Accounting questions