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Anderson Corporation purchased a machine on January 2, 2019, for $2,400,000. The machine has an estimated 6-year life with no salvage value. The straight-line method
Anderson Corporation purchased a machine on January 2, 2019, for $2,400,000. The machine has an estimated 6-year life with no salvage value. The straight-line method of depreciation is being used for financial statement purposes and MACRS will be used for tax purposes. a. The company deducts $600,000 for MACRS depreciation in 2019, and the pretax accounting income is $2,000,000. Record the 2019 journal entry for taxes if the company's tax rate is 40% for the current year and for future years. b. The company deducts $300,000 for MACRS depreciation for 2020, and the pretax accounting income is $4,000,000. Record the 2020 journal entry for taxes if the company's tax rate is 40% for all years. c. Ignore item b. The company deducts $300,000 for MACRS depreciation for 2020, and the pretax accounting income is $4,000,000. Record the 2020 journal entry for taxes if the 2020 tax rate is 40%, but a newly enacted tax rate of 30% has been adopted for 2021 and beyond
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