Valuation Allowance(1).docx - ACCT 4501 Class Session#9 Valuation Allowance At the end of 2018 World Industries had a deferred tax asset of $10,000,000

Valuation Allowance(1).docx - ACCT 4501 Class Session#9...

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ACCT 4501 Class Session #9 Valuation Allowance At the end of 2018, World Industries had a deferred tax asset of $10,000,000, attributable to its only temporary difference of $50,000,000 for estimated future warranty expenses. At the end of 2019, the temporary difference is $45,000,000. At the beginning of the 2019, there was a balance of $2,500,000 in a valuation account related to the deferred tax asset. At 2019 year-end, World Industries now estimates that it is probable that one-third of the deferred tax asset will never be realized. Taxable income is $12,000,000 for 2019 and the tax rate is 20% for all years. Required: Prepare journal entries to record World Industries' income tax expense for 2019. Show supporting computations for each component of the
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  • Spring '16
  • Progressive Tax, Taxation in the United States, Generally Accepted Accounting Principles, Deferred tax asset

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