On January 1, 2021, Roberts Company purchased major pieces of manufacturing equipment for a total of $10 million. Roberts uses straight-line depreciation for financial statement reporting and deducted 100% of the equipment's cost for income tax reporting in 2021. At December 31, 2023, the book value of the equipment was $75 million. At December 31, 2024, the book value of the equipment was $70 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2024 was $110 million. Assume an income tax rate of 20 %, the amount of current income tax expenses reported on 2024 income statement would be: O $24 million O $21 million O $23 million O $22 million

On January 1, 2021, Roberts Company purchased major pieces of manufacturing equipment for a total of $10 million. Roberts uses straight-line depreciation for financial statement reporting and deducted 100% of the equipment's cost for income tax reporting in 2021. At December 31, 2023, the book value of the equipment was $75 million. At December 31, 2024, the book value of the equipment was $70 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2024 was $110 million. Assume an income tax rate of 20 %, the amount of current income tax expenses reported on 2024 income statement would be: O $24 million O $21 million O $23 million O $22 million

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 14P: Hunter Company purchased a light truck on January 2, 2019 for 18,000. The truck, which will be used...

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On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.
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On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.
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