Question

Corning-Howell reported taxable income in 2021 of $196 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: Carrying Amount Tax Basis $ 88 million $ 84 million 96 million 80 million Assets Current Net accounts receivable Prepaid insurance Prepaid advertising Noncurrent Investments in equity securities (fair value)* Buildings and equipment (net) Liabilities Current Deferred subscription revenue Long-term Liability-compensated future absences 80 million 436 million 356 million 88 million 670 million Gains and losses taxable when investments are sold. The total deferred tax asset and deferred tax liability amounts at January 1, 2021, were $194.25 million and $25 million, respectively. The enacted tax rate is 25% each year. Required: 1. Determine the total deferred tax asset and deferred tax liability amounts at December 31, 2021. 2. Determine the increase (decrease) in the deferred tax asset and deferred tax liability accounts at December 31, 2021. 3. Determine the income tax payable currently for the year ended December 31, 2021. 4. Prepare the journal entry to record income taxes for 2021. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Determine the total deferred tax asset and deferred tax liability amounts at December 31, 2021. (Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).) Deferred tax amounts ($ in millions)

Answer 1

O Answoro Deferred Tax asso: Allowance for bad Debts = 95.%. * ($84 million $88million) = $1million Deferred subscription Revenue = 257.X $ 88 million = $22millon compensation feature absence - liabilirley = 25.7. * $ 670milliom $167.50 million. Deberred tax asset = $1 million + Bamillion +$167.50 million = $190.50 million Hax asset = $190.50 million Delbard Tax drability prepaid insurcenice = 954. xf96 million = $ 24 million i free paid advertising = 35 .xpso million = $ 30 million mustments invaliard Gain = 25. x£80 million comillion

buildings = 25%. * (6 436 million - $356 million) = $ 20 million ,Delyild Tax liabildly Tavalide $34 million to 4 million + 420 million+omillion + 20 million = $84 million Lieland Triax disability a£84 million Decuase in Befened Tax asset :- De crecese in Deloned Tax asset = Ending balance. - beginning balance (190.50 - $194.25-)million = $3:1560 : : Dccrease 4:3.15 million) 7.3190.so from parlos increase in Deferred Ex liability increase - Endling balance -- beginning balance Gi su million. fionymoto) $84 million - $25 million = sq million einerease in Deferred tax liabilitey = $59 million,

income far payable = Parable income x Tax vote = 25%, * $ 196 million = $ 49 million intew tax payable = $ un milion ☺ Journal Entry bebit linmallion) lexidid in million) & 11.75 General Tournal Tax Expease Delexsed Tax asset DelenrodTax liability income-lax payable $3:75 $59 $490