Question
question 1 At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $95 million attributable to a temporary
question 1 At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $95 million attributable to a temporary book-tax difference of $380 million in a liability for estimated expenses. At the end of 2021, the temporary difference is $288 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2021 is $684 million and the tax rate is 25%. Required: 1. Prepare the journal entry(s) to record Paynes income taxes for 2021, assuming it is more likely than not that the deferred tax asset will be realized in full. 2. Prepare the journal entry(s) to record Paynes income taxes for 2021, assuming it is more likely than not that only one-fourth of the deferred tax asset ultimately will be realized.
a.
Prepare the journal entry(s) to record Paynes income taxes for 2021, assuming it is more likely than not that the deferred tax asset will be realized in full. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
B.
Prepare the journal entry(s) to record Paynes income taxes for 2021, assuming it is more likely than not that only one-fourth of the deferred tax asset ultimately will be realized. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
Four independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences: ($ in thousands) Situation 1 2 3 4 $148 $ 280 $324 $452 16 20 20 16 16 92 Taxable income Future deductible amounts Future taxable amounts Balance(s) at beginning of the year: Deferred tax asset Deferred tax liability 2 4 25 2 8 The enacted tax rate is 25%. Required: For each situation, determine the following: (Enter your answers in thousands rounded to one decimal place (i.e. 1,200 should be entered as 1.2). Negative amounts should be indicated by a minus sign. Leave no cell blank, enter "0" wherever applicable.) Situation 2 3 1 4 a. Income tax payable currently. b. Deferred tax asset-ending balance. c. Deferred tax asset-change. d. Deferred tax liability-ending balance. e. Deferred tax liabilitychange. f. Income tax expense
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