Several years ago, Western Electric Corp. purchased equipment for $19,500,000.Western uses straight-line depreciation for financial reporting and
Question:
Several years ago, Western Electric Corp. purchased equipment for $19,500,000. Western uses straight-line depreciation for financial reporting and accelerated depreciation for tax purposes. As of December 31, 2020, the book value of the equipment was $17,550,000 and its tax base was $14,625,000. As of December 31, 2021, the book value of the equipment was $15,600,000 and the tax base was $10,725,000. There were no other temporary differences or permanent differences. Pre-tax countable income for the current year was $24,500,000. A tax rate of 25% applies to all years.
Required:
Prepare journal entry to record Western's income tax expense for the current year.
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella