Solution-Prepare the journal entry at the end

Prepare the journal entry at the end

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Reference no: EM133171215

Question - Callaway SA has a deferred tax asset account with a balance of E150,000 at the end of 2021 due to a single cumulative temporary difference of E375,000. At the end of 2022, this same temporary difference has increased to a cumulative amount of E500,000. Taxable income for 2022 is 6850,000. The tax rate is 40% for all years.

Required -

a. Record income tax expense, deferred income taxes, and income taxes payable for 2022, assuming that it is probable that the deferred tax asset will be realized.

b. Assuming that it is probable that (30,000 of the deferred tax asset will not be realized, prepare the journal entry at the end of 2022 to recognize this probability.

Reference no: EM133171215

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Prepare the journal entry at the end

Reference no: EM133171215

Reference no: EM133171215

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