Question

Ivanhoe Corp. has a deferred tax asset account with a balance of $164,520 at the end of 2016 due to a single cumulative temporary difference of $411,300. At the end of 2017, this same temporary difference has increased to a cumulative amount of $483,700. Taxable income for 2017 is $749,900. The tax rate is 40% for all years. At the end of 2016, Ivanhoe Corp. had a valuation account related to its deferred tax asset of $47,200.

(b) Record income tax expense, deferred income taxes, and income taxes payable for 2017, assuming that it is more likely than not that none of the deferred tax asset will be realized. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

RECORD INCOME TAXES AND ALLOWANCE . 2 JE'S.

Answer 1

Solution calculation of deffered tax asset in 2017 = cumulative temporary difference for 2017 X 40% = 483700 X 40% 193480 Incarcase in deferred tax asset - Defferred tax asset 2012 - Deferred tax asset 2016 193480 - 164 520 = 28960 Тау еxрелде 1 2017 - Takalbe come x юү. - 749900 X 404 = 299960 Income tax expense for 2017 = Tax expense for 2017 - Increase in deferred tax asset = 29996028960 271000 valuation account needed at the end of 2017 - o Valuation account balance at the beginning of 2017 = 47200 Reduction on valuation account during 2017 - 47200

Valuation account needed at the end of 2017 & 193460 valuation account balance at the beginning of 2017 = 47200 Increase in valuation account during 2017 = 146280.

Poarticulars S.No Gredet Debit 271000 Income tax expense Deferred tax asset Income tax payable 28960 299960 146280 146280 Income tax Expense Allowance to reduce Deferred - tax asset to expected regdesabré values