Reference no: EM132730595

At the end of the preceding year, World Industries had a deferred tax asset of $17,500,000, attributable to its only temporary difference of $70,000,000 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, World 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 25% for all years.

Required:

Problem 1: Show well-labeled supporting computations for each amount of the income tax expense. Prepare journal entries to record World Industries' income tax expense for the current year.