On January 1, 2018, Ameen Company purchased major pieces of manufacturing equipment for a total of $54 million. Ameen uses straight-line depreciation for financial statement reporting and deducted 100% of the equipment's cost for income tax reporting in 2018. At December 31, 2020, the book value of the equipment was $45 million. At December 31, 2021, the book value of the equipment was $42 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2021 was $112 million. Required: 1. Prepare the appropriate journal entry to record Ameen's 2021 income taxes. Assume an income tax rate of 20%. 2. What is Ameen's 2021 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 2021 income taxes. Assume an income tax rate of 20%. (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 1 decimal place (i.e., 10,100,000 should be entered as 10.1).) View transaction list View journal entry worksheet No Event General Journal 1 1 Income tax expense Deferred tax liability Income tax payable Required 1 Required 2 > Debit Credit 0.6
On January 1, 2018, Ameen Company purchased major pieces of manufacturing equipment for a total of $54 million. Ameen uses straight-line depreciation for financial statement reporting and deducted 100% of the equipment's cost for income tax reporting in 2018. At December 31, 2020, the book value of the equipment was $45 million. At December 31, 2021, the book value of the equipment was $42 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2021 was $112 million. Required: 1. Prepare the appropriate journal entry to record Ameen's 2021 income taxes. Assume an income tax rate of 20%. 2. What is Ameen's 2021 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 2021 income taxes. Assume an income tax rate of 20%. (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 1 decimal place (i.e., 10,100,000 should be entered as 10.1).) View transaction list View journal entry worksheet No Event General Journal 1 1 Income tax expense Deferred tax liability Income tax payable Required 1 Required 2 > Debit Credit 0.6
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 2018, Ameen Company purchased major pieces of manufacturing equipment for a total of $54 million. Ameen uses
straight-line depreciation for financial statement reporting and deducted 100% of the equipment's cost for income tax reporting in
2018. At December 31, 2020, the book value of the equipment was $45 million. At December 31, 2021, the book value of the
equipment was $42 million. There were no other temporary differences and no permanent differences. Pretax accounting income for
2021 was $112 million.
Required:
1. Prepare the appropriate journal entry to record Ameen's 2021 income taxes. Assume an income tax rate of 20%.
2. What is Ameen's 2021 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 2021 income taxes. Assume an income tax rate of 20%. (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 1 decimal
place (i.e., 10,100,000 should be entered as 10.1).)
View transaction list
View journal entry worksheet
No
Event
General Journal
1
1
Income tax expense
Deferred tax liability
Income tax payable
< Required 1
Required 2 >
Debit
Credit
0.6
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