On January 1, 2021. Ameen Company purchased major pieces of manufacturing equipment for a total of $70 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 $64 million and its tax basis was $54 million. At December 31, 2024, the book value of the equipment was $62 million and its tax basis was $47 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2024 was $35 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 $70 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 $64 million and its tax basis was $54 million. At December 31, 2024, the book value of the equipment was $62 million and its tax basis was $47 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2024 was $35 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?
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter7: Property Transactions: Basis, Gain And Loss, And Nontaxable Exchanges
Section: Chapter Questions
Problem 1BD
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Question
![On January 1, 2021. Ameen Company purchased major pieces of manufacturing equipment for a total of $70 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 $64 million and its tax basis was $54 million. At December 31, 2024, the book value of the equipment was $62
million and its tax basis was $47 million. There were no other temporary differences and no permanent differences. Pretax accounting
income for 2024 was $35 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?
Answer is not complete.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare the appropriate journal entry to record Ameen's 2024 income taxes. Assume an income tax rate of 25%.
Note: 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 2 decimal place (i.e., 10,000,000 should be entered as 10.00).
No
Event
General Journal
1
1
Income tax expense
Deferred tax liability
Income tax payable
<Required 1
Required 2 >
Debit
Credit
11.75
1.25
10.50](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1cc9d083-73de-430e-b3ee-b4d782497cf9%2F65c74664-fe2d-4e24-8fc7-2d38578d34dc%2F55ulxb_processed.png&w=3840&q=75)
Transcribed Image Text:On January 1, 2021. Ameen Company purchased major pieces of manufacturing equipment for a total of $70 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 $64 million and its tax basis was $54 million. At December 31, 2024, the book value of the equipment was $62
million and its tax basis was $47 million. There were no other temporary differences and no permanent differences. Pretax accounting
income for 2024 was $35 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?
Answer is not complete.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare the appropriate journal entry to record Ameen's 2024 income taxes. Assume an income tax rate of 25%.
Note: 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 2 decimal place (i.e., 10,000,000 should be entered as 10.00).
No
Event
General Journal
1
1
Income tax expense
Deferred tax liability
Income tax payable
<Required 1
Required 2 >
Debit
Credit
11.75
1.25
10.50
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