Reference no: EM131773243
Corning-Howell reported taxable income in 2016 of $130 million. At December 31, 2016, the reported amount of some assets and liabilities in the financial statements differed from their tax bases as indicated below:
| |
Carrying Amount |
Tax Basis |
| Assets |
|
|
| Current |
|
|
| Net accounts receivable |
$ |
13 |
million |
$ |
18 |
million |
| Prepaid insurance |
|
26 |
million |
|
0 |
|
| Prepaid advertising |
|
9 |
million |
|
0 |
|
| Noncurrent |
|
|
|
|
|
|
| Investments at fair value with changes in OCI* |
|
5 |
million |
|
0 |
|
| Buildings and equipment (net) |
|
340 |
million |
|
280 |
million |
| Liabilities |
|
|
|
|
|
|
| Current |
|
|
|
|
|
|
| Liability-subscriptions received |
|
15 |
million |
|
0 |
|
| Long-term |
|
|
|
|
|
|
| Liability-postretirement benefits |
|
520 |
million |
|
0 |
|
*Gains and losses taxable when investments are sold.
The total deferred tax asset and deferred tax liability amounts at January 1, 2016, were $220 million and $30 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, 2016
2. Determine the increase (decrease) in the deferred tax asset and deferred tax liability accounts at December 31, 2016.
3. Determine the income tax payable currently for the year ended December 31, 2016
4. Prepare the journal entry to record income taxes for 2016.