Question

At December 31, 2017, Hillyard Corporation has a deferred tax asset of $200,000.Afteracarefulreviewofallavailableevidence,itisdeterminedthatitisprobablethat$60,000 of this deferred tax asset will not be realized. Prepare the necessary journal entry.

Short answer

Income tax expense will be debited and deferred tax asset will be credited by $60,000, respectively.

Step-by-step solution

Meaning of Income-tax

Income tax expense refers to the amount computed on total income, and payable to taxing authority.

Preparing journal entries.

Date	Particulars	Debit ($)	Credit ($)
	Income tax expense	60,000
	Deferred tax asset		60,000