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Alja [10]
3 years ago
14

24. ABC Corp. has a deferred tax asset account with a balance of $75,000 at the end of 2019 due to a single cumulative temporary

difference of $375,000. At the end of 2020, this same temporary difference has increased to a cumulative amount of $400,000. Taxable income for 2020 is $820,000. The tax rate is 20% for all years. No valuation account related to the deferred tax asset is in existence at the end of 2019. Also assume that it is more likely than not that $25,000 of the deferred tax asset will not be realized. Prepare the journal entries required for 2020 (2 points).
Business
1 answer:
nevsk [136]3 years ago
5 0

Answer:

The journal entries to prepare would be as follows:

                                       Debit              Credit

Deferred tax asset    $5,000

Income tax expense $159,000

           Income tax payable                 $164,000

                               Debit              Credit

Income tax expense $25,000

           Valuation Adjustement           $25,000    

Explanation:

The journal entries to prepare would be as follows:

                                       Debit              Credit

Deferred tax asset    $5,000

Income tax expense $159,000

           Income tax payable                 $164,000

Deferred tax asset=($400,000*20%)-$75,000

Deferred tax asset=$5,000

Income tax payable=$820,000*20%=$164,000

Income tax expense=$164,000-$5,000=$159,000

                                    Debit              Credit

Income tax expense $25,000

           Valuation Adjustement           $25,000      

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8 0
2 years ago
C&amp;K Brewing Company is a microbrewery in western Canada. It produces Maiden’s Honor brand ale, a dark beer called Warrior’s
ehidna [41]

Answer:

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Shuster’s lease of retail premises from Thurgood requires Shuster to pay certain fees, subject to the landlord’s proof of the co
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Answer:

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Explanation:

solution

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Answer:

Oct 31

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