Problem 16-13 Tru Developers. |nc.. sells plots of land for industrial development. Tn.l recognizes income for nancial reporting purposes in the year it sells the plots. For some of the plots sold this year. Tru took the position that it could recognize the income for tax purposes when the installments are collected. Income that Tru recognized for nancial reporting purposes in 2018 for plots in this category was $60 million- The company expected to collect 60% of each sale in 2019 and 30% in 2020. This amount over the next two years is as follows: :01 $35 nnmon 202 24 million 0 $50 million Tru's pretax accounting income tor 2018 was $90 million. In its income statement, Tru reported interest income of $15 million. unrelated to the land sales, for which the company's position is that the interest is not taxable. Accordingly, the interest was not reported on the tax return. There are no dilferences between accounting income and taxable income other than those described above. The enacted tax rate is 40 percent. Management believes the tax position taken on the land sales has a greater than 50% chance of being upheld based on its technical merits, but the position taken on the interest has a less titan 50% chance of being upheld. It is further believed that the following likelihood percentages apply to the tax treatment of the land sales {35 in millions): Amount Qualifying for Percentage Likelihood of Installment Sales Treatment Tax Treatment Being Sustained $ m% m% m% m% m% 88388 Required: 1. What portion of the tax benet of taxafree interest will Tn.l recognize on its 2018 tax return? 2. What portion of the tax benet of taxafree interest will Tn.l recognize on its 2018 financial statements? 3-a. What portion of the tax on the $60 million income from the plots sold on an installment basis will Tru deter on its 2018 tax return? 3-b. What portion of the tax on the $60 million income from the plots sold on an installment basis will Tru defer in its 2018 financial statements? 4e Prepare the journal entry to record income taxes in 2018 assuming full recognition of the tax benets in the nancial statements of both differences between pretax accounting income and taxable income. 5. Prepare the journal entry to record income taxes in 2018 assuming the recognition of the tax benefits in the financial statements you indicated in requirements 13