Several years ago,Western Electric Corp.purchased equipment for $20,000,000.Western uses straight-line depreciation for financial reporting and MACRS for tax purposes.At December 31,2015,the carrying value of the equipment was $18,000,000 and its tax basis was $15,000,000.At December 31,2016,the carrying value of the equipment was $16,000,000 and the tax basis was $11,000,000.There were no other temporary differences and no permanent differences.Pretax accounting income for the current year was $25,000,000.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.Show well-labeled computations for the income tax payable and the change in the deferred tax account.

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The Answer of Several years ago,Western Electric Corp.purchased equipment for $20,000,000.Western uses straight-line depreciation for financial reporting and MACRS for tax purposes.At December 31,2015,the carrying value of the equipment was $18,000,000 and its tax basis was $15,000,000.At December 31,2016,the carrying value of the equipment was $16,000,000 and the tax basis was $11,000,000.There were no other temporary differences and no permanent differences.Pretax accounting income for the current year was $25,000,000.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.Show well-labeled computations for the income tax payable and the change in the deferred tax account.

Several Years Ago,Western Electric Corp