How would you find income tax payable? I got it by 180 x 400 = 72 so thats why I put that. For requirement 1 part 2, it asks to "Record valuation allowance for the end of 2018." I thought the JE would be Debit income tax expense and credit valuation allowance but thats not right.. What would it be? Or is it supposed to be reversed? Explanations would be great, thank you in advance.
Exercise 16-10 Deferred tax asset; taxable income given; valuation allowance (LO16-3] At the end of 2017, Payne Industries had a deferred tax asset account with a balance of $30 million attributable to a temporary book-tax difference of $75 million. At the end of 2018, the temporary difference is $70 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2018 is $170 million and the tax rate is 40%. Required: 1. Prepare the journal entry(s) to record Payne's income taxes for 2018, 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 2018, assuming it is more likely than not that only one- fourth (25%) of the deferred tax asset will ultimately be realized. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entry(s) to record Payne's income taxes for 2018, assuming it is more likely than not that the deferred tax asset will be realized in full. (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).) General Journal Credit No 1 Event 1 Debit 74 Income tax expense Deferred tax asset Income tax payable 2 72 X 21 Income tax expense Valuation allowance-Deferred tax asset *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. Required 1 Required 2 Assume instead that it is more likely than not that only one-fourth (25%) of the remaining balance in the deferred tax asset will be realized. Prepare the journal entry(s) to record Payne's income taxes for 2018. (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).) Show less A General Journal Credit No Event 11 Debit 74 Income tax expense Deferred tax asset Income tax payable 2 72 X Income tax expense Valuation allowance-Deferred tax asset
