Question

Prepare the journal entry(s) to record Payne's income taxes for 2013, assuming it is more likely than not that the deferred tax asset will be realized.

Option 1:
Debit: Income Tax Expense $72 million
Credit: Deferred Tax Asset $72 million

Option 2:
Debit: Income Tax Expense $70 million
Credit: Deferred Tax Asset $70 million

Option 3:
Debit: Income Tax Expense $28 million
Credit: Deferred Tax Asset $28 million

Option 4:
Debit: Income Tax Expense $40 million
Credit: Deferred Tax Asset $40 million

Answer 1

Without specific income figures, we cannot provide a precise journal entry for recording Payne's income taxes. A correct entry would debit income tax expense and credit deferred tax asset for the amount expected to be realized.

This correct answer is none of the above.

Step-by-step explanation:

The student's question requires us to choose the correct journal entry to record Payne's income taxes for 2013 with the assumption that the deferred tax asset will be realized.

Because we don't have exact figures on Payne's taxable income or the tax rate applied, we can't provide a definitive answer without additional context.

However, in general, if a company expects to realize the benefit of a deferred tax asset, it would debit the income tax expense and credit the deferred tax asset.

The amounts would correspond to the deferred tax asset that is expected to be realized.

This correct answer is none of the above.