In: Accounting
On January 1, 2013, Ameen Company purchased a building for $42
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 $36 million and its
tax basis was $26 million. At December 31, 2018, the book value of
the building was $34 million and its tax basis was $19 million.
There were no other temporary differences and no permanent
differences. Pretax accounting income for 2018 was $50
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?