Exercise 16-2 (Algo) Determine taxable income; determine prior year deferred tax amount; financial statement effects [LO16-2] On January 1, 2021, Ameen Company purchased major pieces of manufacturing equipment for a total of $76 million. Ameen uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. At December 31, 2023, the book value of the equipment was $70 million and its tax basis was $60 million. At December 31, 2024, the book value of the equipment was $68 million and its tax basis was $53 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2024 was $55 million. Required: 1. Prepare the appropriate journal entry to record Ameen's 2024 income taxes. Assume an income tax rate of 25%. 2. What is Ameen's 2024 net income? Complete this question by entering your answers in the tabs below.
Exercise 16-2 (Algo) Determine taxable income; determine prior year deferred tax amount; financial statement effects [LO16-2] On January 1, 2021, Ameen Company purchased major pieces of manufacturing equipment for a total of $76 million. Ameen uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. At December 31, 2023, the book value of the equipment was $70 million and its tax basis was $60 million. At December 31, 2024, the book value of the equipment was $68 million and its tax basis was $53 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2024 was $55 million. Required: 1. Prepare the appropriate journal entry to record Ameen's 2024 income taxes. Assume an income tax rate of 25%. 2. What is Ameen's 2024 net income? Complete this question by entering your answers in the tabs below.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exercise 16-2 (Algo) Determine taxable income; determine prior year deferred tax amount; financial
statement effects [LO16-2]
On January 1, 2021, Ameen Company purchased major pieces of manufacturing equipment for a total of $76 million. Ameen uses
straight-line depreciation for financial statement reporting and MACRS for income tax reporting. At December 31, 2023, the book value
of the equipment was $70 million and its tax basis was $60 million. At December 31, 2024, the book value of the equipment was $68
million and its tax basis was $53 million. There were no other temporary differences and no permanent differences. Pretax accounting
income for 2024 was $55 million.
A
Required:
1. Prepare the appropriate journal entry to record Ameen's 2024 income taxes. Assume an income tax rate of 25%.
2. What is Ameen's 2024 net income?
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Prepare the appropriate journal entry to record Ameen's 2024 income taxes. Assume an income tax rate of 25%.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in
millions rounded to 2 decimal place (i.e., 10,000,000 should be entered as 10.00).
View transaction list](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F75d8f333-11d1-4432-9a73-7a65f0b6a787%2F93503322-ad0f-4f0e-88df-7fbf4392792d%2Fw9z1sy_processed.jpeg&w=3840&q=75)
Transcribed Image Text:S
Exercise 16-2 (Algo) Determine taxable income; determine prior year deferred tax amount; financial
statement effects [LO16-2]
On January 1, 2021, Ameen Company purchased major pieces of manufacturing equipment for a total of $76 million. Ameen uses
straight-line depreciation for financial statement reporting and MACRS for income tax reporting. At December 31, 2023, the book value
of the equipment was $70 million and its tax basis was $60 million. At December 31, 2024, the book value of the equipment was $68
million and its tax basis was $53 million. There were no other temporary differences and no permanent differences. Pretax accounting
income for 2024 was $55 million.
A
Required:
1. Prepare the appropriate journal entry to record Ameen's 2024 income taxes. Assume an income tax rate of 25%.
2. What is Ameen's 2024 net income?
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Prepare the appropriate journal entry to record Ameen's 2024 income taxes. Assume an income tax rate of 25%.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in
millions rounded to 2 decimal place (i.e., 10,000,000 should be entered as 10.00).
View transaction list
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