Several years ago, Western Electric Corp. purchased equipment for $15,000,000. Western uses straight- line depreciation for...

 

Transcribed Image Text:

Several years ago, Western Electric Corp. purchased equipment for $15,000,000. Western uses straight- line depreciation for financial reporting and MACRS for tax purposes. At December 31, 2015, the carrying value of the equipment was $13,500,000 and its tax basis was $11,250,000. At December 31, 2016, the carrying value of the equipment was $12,000,000 and the tax basis was $8,250,000. There were no other temporary differences and no permanent differences. Pretax accounting income for the current year was $20,000,000. A tax rate of 35% applies to all years. Required: Prepare one 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 view general journal Journal Entry Worksheet Record the income taxes. Transaction 1 General Journal Income tax expense Deferred tax liability Income tax payable Debit Credit (X) Several years ago, Western Electric Corp. purchased equipment for $15,000,000. Western uses straight- line depreciation for financial reporting and MACRS for tax purposes. At December 31, 2015, the carrying value of the equipment was $13,500,000 and its tax basis was $11,250,000. At December 31, 2016, the carrying value of the equipment was $12,000,000 and the tax basis was $8,250,000. There were no other temporary differences and no permanent differences. Pretax accounting income for the current year was $20,000,000. A tax rate of 35% applies to all years. Required: Prepare one 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 view general journal Journal Entry Worksheet Record the income taxes. Transaction 1 General Journal Income tax expense Deferred tax liability Income tax payable Debit Credit (X)

Answer rating: 100% (QA)

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