Reference no: EM132958188

Corning-Howell reported taxable income in 2021 of $164 million. At December 31, 2021, the reported amount of some assets and liabilities in the financial statements differed from their tax bases as indicated below:

Assets                                                                                   Current
Net accounts receivable Carrying amount: $52million Tax Basis: $56million
Prepaid insurance Carrying amount: 64million Tax Basis: 0
Prepaid advertising Carrying amount: 48million Tax basis: 0
Noncurrent
Investments in equity securities (fair value)* Carrying amount: 48million Tax Basis: 0
Buildings and equipment (net) Carrying amount: 404million Tax Basis: 324million

Liabilities                                                                         Current
Deferred subscription revenue Carrying amount: 56million Tax Basis: 0
Long-term
Liability-compensated future absences Carrying amount: 638million Tax Basis: 0

Gains and losses taxable when investments are sold.

The total deferred tax asset and deferred tax liability amounts at January 1, 2021, were $178.25 million and $25 million, respectively. The enacted tax rate is 25% each year.

Required:

Problem 1. Determine the total deferred tax asset and deferred tax liability amounts at December 31, 2021.

Problem 2. Determine the increase (decrease) in the deferred tax asset and deferred tax liability accounts at December 31, 2021.

Problem 3. Determine the income tax payable currently for the year ended December 31, 2021.

Problem 4. Prepare the journal entry to record income taxes for 2021.