Tru Developers, Incorporated, sells plots of land for industrial development. Tru recognizes income for financial

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 financial

reporting purposes in $2024$ for plots in this category was $$70$ million. The company expected to collect $60\%$ of each

sale in $2025$ and $40\%$ in $2026.$ This amount over the next two years is as follows:

$2025$ $ $42$ million

$2026,28$ million

$=$$$70$million

Tru's pretax accounting income for $2024$ was $$110$ million. In its income statement, Tru reported interest income of $$20$

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 differences 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 than $50\%$ chance of being upheld. It is further

believed that the following likelihood percentages apply to the tax treatment of the land sales $($ $ in millions$)$:

Required:

What portion of the tax benefit of tax$-$free interest will Tru recognize on its $2024$ tax return?

What portion of the tax benefit of tax$-$free interest will Tru recognize on its $2024$ financial statements?

$3-$a$.$ What portion of the tax on the $$70$ million income from the plots sold on an installment basis will Tru defer on its

$2024$ tax return?

$3-$b$.$ What portion of the tax on the $$70$ million income from the plots sold on an installment basis will Tru show as a

deferred tax asset or liability in its $2024$ financial statements?

Prepare the journal entry to record income taxes in $2024,$ assuming full recognition of the tax benefits in the financial

statements of both differences between pretax accounting income and taxable income.

Prepare the journal entry to record income taxes in $2024,$ assuming the recognition of the tax benefits in the financial

statements you indicated in requirements $1-3.$

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Complete this question by entering your answers in the tabs below.

Prepare the journal entry to record income taxes in $2024,$ assuming the recognition of the

tax benefits in the financial statements you indicated in requirements $1-3.$

Note: 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 $10).$

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