Heat oven to 400°F. Spray 13x9-inch pan lightly with nonstick cooking spray.
In large bowl, combine potato flakes, seasoned salt, paprika, garlic powder and pepper. Add margarine; mix well. In medium bowl, combine egg and water; beat well.
Dip chicken pieces in egg mixture; thorougly coat all sides with potato flake mixture. Place chicken, skin side up, in sprayed pan.
Bake uncovered at 400°F. for 55 to 60 minutes or until chicken is fork tender and juices run clear.