Prepare the journal entry to record mathis income taxes

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Question - At the end of 2012, mathis industries had a deferred tax asset account with a balance of $120 million attributable to a temporary book-tax difference of $300 million in a liability for estimated expenses. At the end of 2013, the temporary difference is $280 million. Mathis has no other temporary differences. Taxable income for 2013 is $720 million and the tax rate is 40%.

Required:

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

2. Prepare the journal entry(s) to record Mathis's income taxes for 2013 assuming it is "more likely than not" that one-half of the deferred tax asset will not ultimately be realized.

Reference no: EM132056906

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