On January 1, 2013, Ameen Company purchased a building for $36 million. Ameen uses straight-line depreciationfor financial statement reporting and MACRS for income tax reporting. At December 31, 2017, the book valueof the building was $30 million and its tax basis was $20 million. At December 31, 2018, the book value of thebuilding was $28 million and its tax basis was $13 million. There were no other temporary differences and nopermanent 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 of40%.2. What is Ameen’s 2018 net income?
On January 1, 2013, Ameen Company purchased a building for $36 million. Ameen uses straight-line depreciationfor financial statement reporting and MACRS for income tax reporting. At December 31, 2017, the book valueof the building was $30 million and its tax basis was $20 million. At December 31, 2018, the book value of thebuilding was $28 million and its tax basis was $13 million. There were no other temporary differences and nopermanent 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 of40%.2. What is Ameen’s 2018 net income?
Chapter14: Choice Of Business Entity—operations And Distributions
Section: Chapter Questions
Problem 35P
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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 building was $30 million 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
40%.
2. What is Ameen’s 2018 net income?
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