Bramble, Inc. has a deferred tax asset account with a balance of $260,400 at the end of 2024 due to a single cumulative temporary difference of $868,000. At the end of 2025 this same temporary difference has decreased to a cumulative amount of $768,000. Taxable income for 2025 is $668,000. The tax rate is 20% for all years. No valuation account related to the deferred tax asset is in existence at the end of 2024. (a) Record income tax expense, deferred income taxes, and income taxes payable for 2025, assuming that it is more likely than not that the deferred tax asset will be realized. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Income Tax Expense Income Tax Payable Deferred Tax Liability Debit 113600 20000 Credit 123600 (b) Assuming that it is more likely than not that one-half of the deferred tax asset will not be realized, prepare the journal entry at the end of 2025 to record the valuation account. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Account Titles and Explanation Income Tax Expense Allowance to Reduce Deferred Tax Asset to Expected Rea Debit 20000 Credit 20000
Bramble, Inc. has a deferred tax asset account with a balance of $260,400 at the end of 2024 due to a single cumulative temporary difference of $868,000. At the end of 2025 this same temporary difference has decreased to a cumulative amount of $768,000. Taxable income for 2025 is $668,000. The tax rate is 20% for all years. No valuation account related to the deferred tax asset is in existence at the end of 2024. (a) Record income tax expense, deferred income taxes, and income taxes payable for 2025, assuming that it is more likely than not that the deferred tax asset will be realized. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Income Tax Expense Income Tax Payable Deferred Tax Liability Debit 113600 20000 Credit 123600 (b) Assuming that it is more likely than not that one-half of the deferred tax asset will not be realized, prepare the journal entry at the end of 2025 to record the valuation account. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Account Titles and Explanation Income Tax Expense Allowance to Reduce Deferred Tax Asset to Expected Rea Debit 20000 Credit 20000
Chapter26: Tax Practice And Ethics
Section: Chapter Questions
Problem 32P
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