At the end of its first year of operations, Eagle Manufacturing has a deductible temporary difference of $100,000. Eagle has income taxes payable of $90,000 due to a tax rate of 20%. Eagle also recorded a deferred tax asset. Later, they determined that it is more likely than not that $15,000 of the deferred tax asset will not be realized. What entry should Eagle make to record the reduction in asset value?
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Home » Business » At the end of its first year of operations, Eagle Manufacturing has a deductible temporary difference of $100,000. Eagle has income taxes payable of $90,000 due to a tax rate of 20%. Eagle also recorded a deferred tax asset.