Skysong, Inc. has a deferred tax asset account with a balance of $257,100 at the end of 2024 due to a single cumulative temporary difference of $857,000. At the end of 2025 this same temporary difference has decreased to a cumulative amount of $757,000. Taxable income for 2025 is $657,000. 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 Debit Credit (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 Debit Credit
Skysong, Inc. has a deferred tax asset account with a balance of $257,100 at the end of 2024 due to a single cumulative temporary difference of $857,000. At the end of 2025 this same temporary difference has decreased to a cumulative amount of $757,000. Taxable income for 2025 is $657,000. 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 Debit Credit (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 Debit Credit
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 9MC: Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and...
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Transcribed Image Text:Skysong, Inc. has a deferred tax asset account with a balance of $257,100 at the end of 2024 due to a single cumulative temporary
difference of $857,000. At the end of 2025 this same temporary difference has decreased to a cumulative amount of $757,000.
Taxable income for 2025 is $657,000. 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
Debit
Credit
(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
Debit
Credit
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