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This is chapter 16 E-11 of Intermediate Accounting 2 by the authors Spiceland, Nelson, and Thomas.

At the end of 2017, Payne Industries had a deferred tax asset account with a balance of $30 million attributable to a tempora

Step 3: Prepare the Entry: Debit Date Post Ref. Credit (S) (S) 2018 74,000,000 Account Title and Explanation Income Tax Expen

If deferred asset is normally a credit balance when it is decreased from 30,000,000 to 28,000,000 wouldn't it be debited in the above journal entry instead of credited?

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Answer #1
Ending Bal. = 70 Million x 40% $  28,000,000.00
Less: Beginning Bal. 75 mill x 40% $ (30,000,000.00)
Deferred Tax Assets $   (2,000,000.00)
When there is decrease in a deferred tax asset it would be credited
In this case deferred tax asset has reduced that’s why it will be credited.
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