Several years ago, Marathon Oil Corp. purchased equipment for $16,500,000. Marathon Oil uses straight-line depreciation for financial reporting and accelerated depreciation for tax purposes. At December 31, 2020, the carrying value of the equipment was $14,850,000 and its tax basis was $12,375,000. At December 31, 2021, the carrying value of the equipment was $13,200,000 and the tax basis was $9,075,000. There were no other temporary differences and no permanent differences. Pretax accounting income for the current year was $21,500,000. A tax rate of 25% applies to all years.   Required: Prepare the journal entry to record Marathon Oil's income tax expense for the current year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Several years ago, Marathon Oil Corp. purchased equipment for $16,500,000. Marathon Oil uses straight-line depreciation for financial reporting and accelerated depreciation for tax purposes. At December 31, 2020, the carrying value of the equipment was $14,850,000 and its tax basis was $12,375,000. At December 31, 2021, the carrying value of the equipment was $13,200,000 and the tax basis was $9,075,000. There were no other temporary differences and no permanent differences. Pretax accounting income for the current year was $21,500,000. A tax rate of 25% applies to all years.
 
Required:
Prepare the journal entry to record Marathon Oil's income tax expense for the current year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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