On January 1, 2013, Ameen Company purchased a building for $72 million. Ameen uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. At December 31, 2017, the book value of the building was $66 million and its tax basis was $56 million. At December 31, 2018, the book value of the building was $64 million and its tax basis was $49 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2018 was $50 million. 1. Prepare the appropriate journal entry to record Ameen's 2018 income taxes. Assume an income tax rate of 40%. 2. What is Ameen's 2018 net income?
On January 1, 2013, Ameen Company purchased a building for $72 million. Ameen uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. At December 31, 2017, the book value of the building was $66 million and its tax basis was $56 million. At December 31, 2018, the book value of the building was $64 million and its tax basis was $49 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2018 was $50 million. 1. Prepare the appropriate journal entry to record Ameen's 2018 income taxes. Assume an income tax rate of 40%. 2. What is Ameen's 2018 net income?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 2013, Ameen Company purchased a building
for $72 million. Ameen uses straight-line depreciation for
financial statement reporting and MACRS for income tax
reporting. At December 31, 2017, the book value of the
building was $66 million and its tax basis was $56 million. At
December 31, 2018, the book value of the building was $64
million and its tax basis was $49 million. There were no other
temporary differences and no permanent differences. Pretax
accounting income for 2018 was $50 million.
1. Prepare the appropriate journal entry to record Ameen's
2018 income taxes. Assume an income tax rate of 40%.
2. What is Ameen's 2018 net income?
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