Several years ago, Southern Corporation purchased a fixed asset for $20 million. At 12-31-09, the carrying value
Question:
Several years ago, Southern Corporation purchased a fixed asset for $20 million. At 12-31-09, the carrying value (cost minus accumulated depreciation for financial reporting purposes) of the asset was $17 million and its tax basis (cost minus accumulated depreciation for tax purposes) was $12 million. On 12-31-10, the carrying value was $16 million and the tax basis was $9 million. There were no other temporary differences besides depreciation. Southern's pretax financial income was $25 million including $1 million in municipal bond interest. Southern is subject to a 20% tax rate.
(a) Prepare the journal entry to record Southern's tax expense for 2010
(b) Calculate Southern's net after tax income for 2010.
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
Intermediate Accounting
ISBN: 9781259722660
9th Edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas