Prosser Systems began operations in 2020. Prosser has a tax rate of 40%. That year the company reported pretax accounting income of $70 million, which included the following amounts:

• Compensation expense of $3 million related to employee stock option plans granted to organizers was reported in the 2020 income statement. This expense is not deductible for tax purposes (permanent).
• An asset with four-year useful life was acquired at the beginning of 2020. It is depreciated by the straight-line method in the income statement. On the tax return, the company reported depreciation expenses of $48 million in excess of the straight-line method.

Required:

1. Calculate taxable income for 2020.
2. Prepare the journal entry to record income taxes for 2020.
3. Prepare the income statement for 2020.