Assume the same information as E19-14B, except that at the end of 2013, NovaSci, Inc. had a valuation account related to its deferred tax asset of $125,000.

In E19-14B, NovaSci, Inc. has a deferred tax asset account with a balance of $255,000 at the end of 2013 due to a single cumulative temporary difference of $850,000. At the end of 2014 this same temporary difference has decreased to a cumulative amount of $750,000. Taxable income for 2014 is $650,000. The tax rate is 30% for all years. No valuation account related to the deferred tax asset is in existence at the end of 2013.

Instructions

(a) Record income tax expense, deferred income taxes, and income taxes payable for 2014, assuming that it is more likely than not that the deferred tax asset will be realized in full.

(b) Record income tax expense, deferred income taxes, and income taxes payable for 2014, assuming that it is more likely than not that one-half of the deferred tax asset will be realized.