E Chegg Study TEXTBOOK SOLUTIONS EXPERT oRA Search :? Chapter 16, Problem 2E 2 B

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E Chegg Study TEXTBOOK SOLUTIONS EXPERT oRA Search :? Chapter 16, Problem 2E 2 BookmarksShow all steps: Post a question Anowers frem our experts for your tough Problem Enter question On January 1, 2013, Ameen Company purchased a building for $36 million. Ameen uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. At December 31, 2017, the book value of the buiking was $30 milllon and Its tax basis was $20 million. At December 31, 2018, the book value of the building was $28 million and its tax basis was $13 million. There were no other temporary differences and no permanent differences Pretax accounting income for 2018 was $45 million. Required: 1. Prepare the appropriate journal entry to record Ameen's 2018 income taxes. Assume an income tax rate of 40% 2. What is Ameen's 2018 net income? Continue to post 19 questions remaining My Textbook Solutions Solutions Add a by Chegy textbook Intermediate Those Who Accounting Can, Teach Step-by-step solution 3h Fdrion View ell sulutions Step 1 of 11 Taxable Income Taxable income: The amount of adjusted gross income that is liable to be taxed is referred to as taxable income Chogg tutors who can holp right now Ritu

Explanation / Answer

1)Depreciation for Financial purpose = Book value at beginning of 2018-Book value at end of 2018

         = 30-28

         = 2

Depreciation for Tax purpose :20-13 =7

Temporary difference = 7-2 = 5

2)Net Income =Pretax income [1-tax]

        = 45[1-.40]

          = 27 million

Date Account Debit credit 31 dec 2018 Income tax expense [45*.40] 18 Deferred tax liability [5*.40] 2 Income tax payable 16

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