Several years ago, Western Electric Corp. purchased equipment for $25,000,000. Western uses straight-line depreciation for financial...

 

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Several years ago, Western Electric Corp. purchased equipment for $25,000,000. Western uses straight-line depreciation for financial reporting and accelerated depreciation for tax purposes. At December 31, 2020, the carrying value of the equipment was $22,500,000 and its tax basis was $18,750,000. At December 31, 2021, the carrying value of the equipment was $20,000,000 and the tax basis was $13,750,000. There were no other temporary differences and no permanent differences. Pretax accounting income for the current year was $30,000,000. A tax rate of 25% applies to all years. Required: Prepare the journal entry to record Western's income tax expense for the current year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 Record the income taxes. Note: Enter debits before credits. Transaction 1 Record entry General Journal Clear entry < Prev Debit Credit View general Journal 11 of 34 Next > Several years ago, Western Electric Corp. purchased equipment for $25,000,000. Western uses straight-line depreciation for financial reporting and accelerated depreciation for tax purposes. At December 31, 2020, the carrying value of the equipment was $22,500,000 and its tax basis was $18,750,000. At December 31, 2021, the carrying value of the equipment was $20,000,000 and the tax basis was $13,750,000. There were no other temporary differences and no permanent differences. Pretax accounting income for the current year was $30,000,000. A tax rate of 25% applies to all years. Required: Prepare the journal entry to record Western's income tax expense for the current year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 Record the income taxes. Note: Enter debits before credits. Transaction 1 Record entry General Journal Clear entry < Prev Debit Credit View general Journal 11 of 34 Next >

Answer rating: 100% (QA)

Answer Book dereciation for the current year Carrying value ... View the full answer