At the end of the preceding year galactic industries had a

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At the end of the preceding year, galactic industries had a deferred tax asset of $17,500,000, attributable to its only temporary difference of $50,000,000 for estimated expenses. At the end of the current year, the temporary difference is $45,000,000. At the beginning of the year there was no valuation account for the deferred tax asset. At year-end, Galactic Industries now estimates that it is more likely than not that one-third of the deferred tax asset will never be realized. Taxable income is $12,000,000 for the current year and the tax rate is 30% for all years. Required: show well-labeled supporting computations for each component of the journal entries.

1) Prepare the journal entry to record Galactic Industries' income tax expense for the current year.

2) Prepare the journal entry for the valuation allowance for the current year.

Reference no: EM13570244

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