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
