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Vika [28.1K]
3 years ago
13

On January 1, 2013, Ameen Company purchased a building for $36 million. Ameen uses straight-line depreciation for financial stat

ement reporting and MACRS for income tax reporting. At December 31, 2015, the book value of the building was $30 million and its tax basis was $20 million. At December 31, 2016, 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 2016 was $45 million. The tax rate is 40%. The journal entry to account for the temporary difference will include
Business
1 answer:
Amiraneli [1.4K]3 years ago
3 0

Answer:

1.Dr Income Tax Expense 22

Cr Income Tax Payable 16

Cr Deferred Tax Liability 6

2.Net Income of Ameen in 2016 = $23

Explanation

1.Preparation of the appropriate journal entry to record Ameena 2016 income taxes

Calculation for Pretax accounting income

Pretax accounting income = $45

Less:Excess Depreciation as per tax = ($5)

($20-$13)-($30-$28)

$7-$5

=$5

Taxable Income = $40

Income tax for the year = 40 × 40%

Income tax for the year= $16

Calculation for Deferred Tax Expense for the year 2016

Deferred Tax Expense for the year 2016 = ($28 - $13) ×40%

Deferred Tax Liability= $15 ×40%

Deferred Tax Liability= $6

Calculation for Income Tax Expense

Income Tax Expense = $16 + $6

Income Tax Expense= $22

Therefore the appropriate journal entry to record Ameena 2016 income taxes will be:

Dr Income Tax Expense $22

Cr Income Tax Payable $16

Cr Deferred Tax Liability $6

2. Calculation for Ameen 2016 net income

Net Income

Accounting Income of Ameen = $45

Less: Total Tax Expense = ($22)

Net Income of Ameen in 2016 = $23

Therefore the Net Income of Ameen in 2016 will be $23

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Answer:

0.8%

Explanation:

Calculation to determine what percent of the adjusted portfolio would need to be invested in T-Bills

Using this formula

M2 =(Rp - Rf) * σ m / σ p - (Rm - Rf)

Whrere,

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Let plug in the formula

M2= (18 - 6) * 22 / 30 - (14 - 6)

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8 0
3 years ago
You purchase fire insurance<br> a. Reduction<br> b. Transfer
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Answer:

Transfer

Explanation:

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5. A nation's frictional unemployment rate is 1%. Its cyclical rate of unemployment is 9.7%, and its structural
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Answer:

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Structural unemployment occurs when a person's skills do not fit the skills required by the firms that are hiring.

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3 years ago
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