Corning howell reported taxable income in 2009 of 120

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Reference no: EM13355665

Corning Howell reported taxable income in 2009 of $120 million. At December 31, 2009, the reported amount of some assets and liabilities in the financial statements differed from their tax basis as indicated below:

Assets	Carrying Amount	Tax Basis
Current
Accounts Receivable	$ 10 million	$ 12 million
Prepaid insurance	20 million	$0
Prepaid rent insurance	6 million	$0
Non current
Buildings and equipment (net)	360 million	280 million
Liabilities
Current
Liability- subscriptions received	14 million	0
Long-term
Liability- postretirement benefits	594 million	0
Shareholders' Equity
Unrealized gain from recording investments	4 million	0
Available for sale at fair market value

The total deferred tax asset and deferred tax liability amounts at January 1, 2009, were $250 million and $40 million, respectively. The enacted tax rate is 40 % each year. Required:

1.Determine the total deferred tax asset and deferred tax liability amounts at December 31, 2009.
2.Determine the increase (decrease) in the deferred tax asset and deferred tax liability accounts at December 31, 2009.
3.Determine the income tax payable currently for the year ended December 31, 2009.
4.Prepare the journal entry to record income taxes for 2009.
5.Show how the deferred tax amounts should be classified and reported in the 2009 balance sheet.

Reference no: EM13355665

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