Question

At the end of the preceding year, World Industries had a deferred tax asset of $12,000,000, attributable to its only temporary difference of $48,000,000 for estimated expenses. At the end of the current year, the temporary difference is $43,000,000. At the beginning of the year there was no valuation account for the deferred tax asset. At year-end, World Industries now estimates that it is more likely than not that one-third of the deferred tax asset will never be realized. Taxable income is $11,800,000 for the current year and the tax rate is 25% for all years.

Required:
Prepare journal entries to record World Industries' income tax expense for the current year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to nearest whole dollar amount.)

Answer 1