On January 1, 2021, Ameen Company purchased major pieces of manufacturing equipment for a total of $56 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 $50 million and its tax basis was $40 million. At December 31, 2024, the book value of the equipment was $48 million and its tax basis was $33 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2024 was $30 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?

On January 1, 2021, Ameen Company purchased major pieces of manufacturing equipment for a total of $56 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 $50 million and its tax basis was $40 million. At December 31, 2024, the book value of the equipment was $48 million and its tax basis was $33 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2024 was $30 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?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

At the end of 2021, Schrutte Inc. in its first year of operations, had pretax financial income of $650,000. The company had extra depreciation taken for tax purposes in the amount of $975,000. Estimated expenses that were deducted for financial income but not yet paid amounted to $425,000. It is estimated that the expenses will be paid in 2022. The tax rate for all years is 25% In the journal entry at the end of the year that records income tax expense, deferred taxes and income taxes payable, what is the entry to the Income Tax Payable account? Question 19 options: a) credit Income Tax Payable account by $162,500 b) credit Income Tax Payable account by $300,000. c) credit to Income Tax Payable account by $25,000. d) credit Income Tax Payable account by $512,500.
On January 1, 2018, Ameen Company purchased major pieces of manufacturing equipment for a total of $36 million. Ameen uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. At December 31, 2020, the book value of the equipment was $30 million and its tax basis was $20 million. At December 31, 2021, the book value of the equipment was $28 million and its tax basis was $12 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2021 was $50 million. Required: 1. Prepare the appropriate journal entry to record Ameen's 2021 income taxes. Assume an income tax rate of 25%. 2. What is Ameen's 2021 net income?
Fore Farms reported a pretax operating loss of $204 million for financial reporting purposes in 2024. Contributing to the loss were (a) a penalty of $4 million assessed by the Environmental Protection Agency for violation of a federal law and paid in 2024 and (b) an estimated loss of $10 million from accruing a loss contingency. The loss will be tax deductible when paid in 2025. The enacted tax rate is 25%. There were no temporary differences at the beginning of the year and none originating in 2024 other than those described above. Taxable income in Fores’s two previous years of operation was as follows: 2022 $ 92 million 2023 $ 68 million Required: Prepare the journal entry to recognize the income tax benefit of the net operating loss in 2024. Assume Fore will carry back its NOL to prior years. What is the net operating loss reported in 2024 income statement? Prepare the journal entry to record income taxes in 2025 assuming pretax accounting income is $232 million. No…
Assume that Maddox Corporation buys new equipment for $15,000 on January 1, 2021. Depreciation for book purposes using the SL method is $3,000 per year. For tax purposes SYD is used with depreciation of $5,000 in 2021 and $4,000 in 2022. Depreciation is the only book - versus - tax difference. Income before depreciation and taxes is $30,000 each year over the next five years and the statutory tax rate is 35% for 2021. The tax rate increased to 40% in 2022. Calculate the increase in the deferred tax liability for 2022. Multiple choice question. $1,200 $250 $700 $500
During 2021, Raines Umbrella Corporation had sales of $760,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $550,000, $90,000, and $95,000, respectively. In addition, the company had an interest expense of $94,000 and a tax rate of 21 percent. (Ignore any tax loss carryforward provisions and assume that interest is fully deductible.) a. What is the company's net income for 2021? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations.) b. What is its operating cash flow? (Do not round intermediate calculations.)
Oriole Company purchased equipment that cost $2595000 on January 1, 2020. The entire cost was recorded as an expense. The equipment had a 9-year life and a $103800 residual value. Oriole uses the straight-line method to account for depreciation expense. The error was discovered on December 10, 2022. Oriole is subject to a 30% tax rate. Oriole’s net income for the year ended December 31, 2020, was understated by $2595000. $2318200. $1816500. $1622740.
On December 31, 2021, the end of the fiscal year, Revolutionary Industries completed the sale of its robotics business for $9 million. The robotics business segment qualifies as a component of the entity according to GAAP. The book value of the assets of the segment was $7 million. The income from operations of the segment during 2021 was $4 million. Pretax income from continuing operations for the year totaled $12 million. The income tax rate is 25%. Prepare the lower portion of the 2021 income statement beginning with income from continuing operations before income taxes. Ignore EPS disclosures.
14) The records for Ehrlich Co. show this data for 2021: Accrued revenue recorded on the books was $480,000. Revenue cash collections was $320,000. Life insurance on officers was $2,800. Fine for pollution violation was $1,000. Machinery was acquired in January for $300,000. Straight-line depreciation over a ten-year life (no salvage value) is used. For tax purposes, accelerated depreciation is used and Ehrlich may deduct 15% for 2021. Interest received on tax exempt Florida State bonds was $9,000. The estimated warranty liability related to 2021 sales was $23,000. Repair costs under warranties during 2021 were $12,000. Pretax financial income is $700,000. The tax rate is 25% for this and future years. Instructions (a) Prepare a schedule starting with pretax financial income and compute taxable income. (b) Prepare the journal entry to record income taxes for 2021. (c ) Show the income statement presentation of income tax expense, starting with "income before tax"
During 2018, Raines Umbrella Corporation had sales of $749,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $576,000, $101,000, and $131,000, respectively. In addition, the company had an interest expense of $99,000 and a tax rate of 40 percent. (Ignore any tax loss carryback or carryforward provisions.) Assume Raines Umbrella Corporation paid out $16,000 in cash dividends. If spending on net fixed assets and net working capital was zero, and if no new stock was issued during the year, what is the firm's net new long-term debt?
Fore Farms reported a pretax operating loss of $200 million for financial reporting purposes in 2024. Contributing to the loss were (a) a penalty of $8 million assessed by the Environmental Protection Agency for violation of a federal law and paid in 2024 and (b) an estimated loss of $30 million from accruing a loss contingency. The loss will be tax deductible when paid in 2025. The enacted tax rate is 25%. There were no temporary differences at the beginning of the year and none originating in 2024 other than those described above. Required: 1. Prepare the journal entry to recognize the income tax benefit of the net operating loss in 2024. 2. What is the net loss reported in 2024 income statement? 3. Prepare the journal entry to record income taxes in 2025 assuming pretax accounting income is $215 million. No additional temporary differences originate in 2025.
.(BE 18-7) Myers Corp. purchased depreciable assets costing $30,000 on January 2, 2020. For tax purposes, the company uses CCA in a class that has a 30% rate. For financial reporting purposes, the company uses straight-line depreciation over five years. The enacted tax rate is 25% for all years. This depreciation difference is the only reversing difference the company has. (a) Calculate the amount of capital cost allowance and depreciation expense from 2020 to 2024, as well as the corresponding balances for the carrying amount and undepreciated capital cost of the depreciable assets at the end of each of the years 2020 to 2024. Assume that these assets are considered "eligible equipment" for purposes of the Accelerated Investment Incentive (under the All, instead of using the half-year rule, companies are allowed a first-year deduction using 1.5 times the standard CCA rate). Round to the nearest dollar. (b) Determine the amount of deferred taxes that should be reported in the SFP for…
In March 2020, Jones Company purchased a Mercedes for use in its business at a cost of $73,000. Required: Assuming no bonus depreciation or Section 179 deduction, calculate the allowable tax depreciation on this asset for 2020, 2021, and 2022. Use Table 7-1 and Table 7-2. Use the below table for annual depreciation deduction for year 2020 to 2022: 2020...$ 10,100 2021... 16,100 2022... 9,700 2023 and subsequent years... 5,760 * Refer to attached images for Table 7-1 and Table 7-2