On January 1, 2018, Ameen Company purchased major pieces of manufacturing equipment for a total of...

Question:

On January 1, 2018, Ameen Company purchased major pieces of manufacturing equipment for a total of $68 million. Ameen uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. At December 31, 2020, the book value of the equipment was$62 million and its tax basis was $52 million. At December 31, 2021, the book value of the equipment was$60 million and its tax basis was $45 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2021 was$45 million.

Required: 1. Prepare the appropriate journal entry to record Ameen’s 2021 income taxes. Assume an income tax rate of 25%.
2. What is Ameen’s 2021 net income?

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