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Exercise 16-3 (Algo) Determine taxable income; determine prior year deferred tax amount; 100% depreciation in year of purchase [LO16-2] On January 1, 2018, Ameen Company
Exercise 16-3 (Algo) Determine taxable income; determine prior year deferred tax amount; 100% depreciation in year of purchase [LO16-2] On January 1, 2018, Ameen Company purchased major pieces of manufacturing equipment for a total of $126 million. Ameen uses straight-line depreciation for financial statement reporting and deducted 100% of the equipment's cost for income tax reporting in 2018. At December 31, 2020, the book value of the equipment was $105 million. At December 31,2021 , the book value of the equipment was $98 million. There were no other temporary differences and no permanent differences. Pretax accounting income 2021 was $158 million. Required: 1. Prepare the appropriate journal entry to record Ameen's 2021 income taxes. Assume an income tax rate of 20%. 2. What is Ameen's 2021 net income? Complete this question by entering your answers in the tabs below. Prepare the appropriate journal entry to record Ameen's 2021 income taxes. Assume an income tax rate of 20%. (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 1 decimal place (i.e, 10,100,000 should be entered as 10.1).) Journal entry worksheet
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