Question

At December 31, 2020, Concord Corporation has a deferred tax asset of $210,000. After a careful review of all available evidence, it is determined that it is more likely than not that $63,000 of this deferred tax asset will not be realized. Prepare the necessary journal entry.

Answer 1

Debit deffered tax expenses with $63,000, and credit Allowance for decreasing the deffered tax asset with $63,000.

Step-by-step explanation:

The journal entry will appear in the book of Concord Corporation as follows:

Details Dr ($) Cr ($)

Deffered tax expenses 63,000

Allowance for decreasing the deffered tax asset 63,000

Being an allowance for decreasing the deffered tax asset to expected net realizable value