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

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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?
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