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On January 1, 2021, 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 2021. At December 31, 2023, the book value of the equipment was $45 million

On January 1, 2021, 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 2021. At December 31, 2023, the book value of the equipment was $45 million

FINANCIAL ACCOUNTING
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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Intermediate Accounting ll ch 16

On January 1, 2021, 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 2021. At December 31, 2023, the book value of the equipment was $45 million. At December 31, 2024, the book value of the equipment was $42 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2024 was $72 million.

Required:

  1. Prepare the appropriate journal entry to record Ameen’s 2024 income taxes. Assume an income tax rate of 20%.
  2. What is Ameen’s 2024 net income?

 

 

**Educational Content: Recording 2024 Income Taxes in the Journal** In this exercise, you will learn how to prepare the appropriate journal entry to record Ameen's 2024 income taxes with an assumed income tax rate of 20%. ### Instructions: - **Transaction/Event Selection**: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. - **Entry Format**: Enter your answers in millions rounded to one decimal place (e.g., 10,100,000 should be entered as 10.1). ### Journal Entry Worksheet: 1. **Task**: Record 2024 income taxes. 2. **Note**: Enter debits before credits. #### Journal Entry Table: - **Columns**: - **Event**: Identifies the specific transaction. - **General Journal**: The account names involved in the transaction. - **Debit**: The amount to be debited. - **Credit**: The amount to be credited. - **Rows**: - Six fields are available for entry. Each field corresponds to a part of the transaction process. ### Options: - **Record Entry**: Click to save your entry. - **Clear Entry**: Click to remove the current entries. - **View General Journal**: Click to see the compiled entries in the general journal. Through this guided practice, you will enhance your understanding of recording income tax transactions accurately using standard accounting practices.
Transcribed Image Text:**Educational Content: Recording 2024 Income Taxes in the Journal** In this exercise, you will learn how to prepare the appropriate journal entry to record Ameen's 2024 income taxes with an assumed income tax rate of 20%. ### Instructions: - **Transaction/Event Selection**: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. - **Entry Format**: Enter your answers in millions rounded to one decimal place (e.g., 10,100,000 should be entered as 10.1). ### Journal Entry Worksheet: 1. **Task**: Record 2024 income taxes. 2. **Note**: Enter debits before credits. #### Journal Entry Table: - **Columns**: - **Event**: Identifies the specific transaction. - **General Journal**: The account names involved in the transaction. - **Debit**: The amount to be debited. - **Credit**: The amount to be credited. - **Rows**: - Six fields are available for entry. Each field corresponds to a part of the transaction process. ### Options: - **Record Entry**: Click to save your entry. - **Clear Entry**: Click to remove the current entries. - **View General Journal**: Click to see the compiled entries in the general journal. Through this guided practice, you will enhance your understanding of recording income tax transactions accurately using standard accounting practices.
### Net Income Calculation Instruction **Question:** What is Ameen’s 2024 net income? **Note:** Enter your answers in millions rounded to 1 decimal place (i.e., 10,100,000 should be entered as 10.1). **Input Field:** - **Net income:** [Input Box] million **Navigation:** - **Required 1**: Previous step button - **Required 2**: Next step button (inactive)
Transcribed Image Text:### Net Income Calculation Instruction **Question:** What is Ameen’s 2024 net income? **Note:** Enter your answers in millions rounded to 1 decimal place (i.e., 10,100,000 should be entered as 10.1). **Input Field:** - **Net income:** [Input Box] million **Navigation:** - **Required 1**: Previous step button - **Required 2**: Next step button (inactive)
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