In-class exercise 16-2 33 Ajax, Ltd. expects pretax accounting income in 2018, 2019, and 2020 of $100M each. Ajax purcha

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In Class Exercise 16 2 33 Ajax Ltd Expects Pretax Accounting Income In 2018 2019 And 2020 Of 100m Each Ajax Purcha 1 (152.89 KiB) Viewed 39 times

In-class exercise 16-2 33 Ajax, Ltd. expects pretax accounting income in 2018, 2019, and 2020 of $100M each. Ajax purchased equipment in 2018 for $60M that has a three-year life and no salvage value. For tax purposes, the depreciation will be deducted over 2018-20 as follows: $35M, $15M, and $10M, respectively. For financial reporting purposes, depreciation is straight-line at $20M for each of 2018-2020. Tax rates are 20% in 2018 and 2019, and 15% in 2020. a. Prepare journal entry at the end of 2018 to account for income tax; b. During 2019, Congress reduced the tax rate to 13% effective in 2020. Prepare journal entry at the end of 2019 to account for income tax.