Problem 16-8 Part 44. Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. Using the schedule,prepare the necessary journal entry to record income taxes for 2019.Complete this question by entering your answers in the tabs below.Required 1Required 2Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. (Amounts to bededucted should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)CurrentYear 2019Future DeductibleAmounts [2020]Future Taxable($ in millions)Amounts [2020]Pretax accounting incomePermanent difference:Life insurance premiumsTemporary differences:Casualty insurance (reversing)Subscriptions-2018Subscriptions-2019Unrealized loss (reversing)Taxable income (income tax return)Enacted tax rate (%)Tax payable currentlyDeferred tax liabilityDeferred tax assetDeferred tax liability Deferred tax assetsEnding balances (balances currently needed)Less: Beginning balancesChanges needed to achieve desired balances Required informationProblem 16-8 Multiple differences; taxable income given; two years; balance sheet classification; changein tax rate [LO16-4, 16-6, 16-8][The following information applies to the questions displayed below.]Arndt, Inc., reported the following for 2018 and 2019 ($ in millions):20182019Revenues$ 995$1,073ExpensesPretax accounting income (income statement)Taxable income (tax return)800840$ 195$ 195233$ 245Tax rate: 40%a. Expenses each year include $30 million from a two-year casualty insurance policy purchased in 2018 for $60 million.The cost is tax deductible in 2018.b. Expenses include $2 million insurance premiums each year for life insurance on key executives.c. Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2018 and 2019 were$39 million and $57 million, respectively. Subscriptions included in 2018 and 2019 financial reporting revenues were$36 million ($14 million collected in 2017 but not recognized as revenue until 2018) and $44 million, respectively. Hint:View this as two temporary differences-one reversingd. 2018 expenses included a $33 million unrealized loss from reducing investments (classified as trading securities) to fair2018; one originating in 2018.value. The investments were sold in 2019.e. During 2017, accounting income included an estimated loss of $8 million from having accrued a loss contingency. Theloss was paid in 2018 at which time it is tax deductible.f. At January 1, 2018, Arndt had a deferred tax asset of $9 million and no deferred tax liability.Problem 16-8 Part 22. Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. Using the schedule,prepare the necessary journal entry to record income taxes for 2018.

Solution 4: Tax schedule showing reconciliation between pre tax financial income, taxable income,…

Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): 2018 2019 Revenues $ 995 $1,073 800 840 Expenses Pretax accounting income (income statement) Taxable income (tax return) $ 195 $ 195 $ 233 $ 245 Tax rate: 40% a. Expenses each year include $30 million from a two-year casualty insurance policy purchased in 2018 for $60 million. The cost is tax deductible in 2018. b. Expenses include $2 million insurance premiums each year for life insurance on key executives. c. Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2018 and 2019 were $39 million and $57 million, respectively. Subscriptions included in 2018 and 2019 financial reporting revenues were $36 million ($14 million collected in 2017 but not recognized as revenue until 2018) and $44 million, respectively. Hint: View this as two temporary differences-one reversing in 2018; one originating in 2018. d. 2018 expenses included a $33 million unrealized loss from reducing investments (classified as trading securities) to fair value. The investments were sold in 2019. e. During 2017, accounting income included an estimated loss of $8 million from having accrued a loss contingency. The loss was paid in 2018 at which time it is tax deductible. f. At January 1, 2018, Arndt had a deferred tax asset of $9 million and no deferred tax liability.

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q