HW 3

At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $80 million attributable to a temporary book-tax difference of $320 million in a liability for estimated expenses. At the end of 2021, the temporary difference is $240 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2021 is $576 million and the tax rate is 25%. Required: 1. Prepare the journal entry(s) to record Paynes 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 Paynes income taxes for 2021, assuming it is more likely than not that only one-fourth of the deferred tax asset ultimately will be realized.

Prepare the journal entry(s) to record Paynes income taxes for 2021, 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).)

Journal entry worksheet

• Record 2021 income taxes.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
1

• Required 1
• Required 2

Prepare the journal entry(s) to record Paynes income taxes for 2021, assuming it is more likely than not that only one-fourth of the deferred tax asset ultimately will be realized. (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).)

Journal entry worksheet

• Record 2021 income taxes.

Note: Enter debits before credits.

Event	General Journal	Debit	Credit
1