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).)(S in millions)CurrentYear 2018Future TaxableAmounts [2019]FutureDeductibleAmounts [2019]Pretax accounting incomePermanent difference:Life insurance premiumsTemporary differences:Casualty insurance expenseSubscriptions-2017Subscriptions-2018Unrealized lossLoss contingencyTaxable incomeEnacted tax rate (%)Tax payable currentlyDeferred tax liabilityDeferred tax assetDeferred tax liability Deferred tax assetEnding balances (balances currently needed)Less: Beginning balancesChanges needed to achieve desired balancesRequired 1Required 2 > 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 2: Tax schedule showing reconciliation between pre tax financial income, taxable income,…

2018 2019 Revenues $ 995 $1,073 800 840 Expenses Pretax accounting income (income statement) Taxable income (tax return) Tax rate: 40% $ 233 $ 245 $ 195 $ 195 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. blem 16-8 Part 2 epare a schedule that reconciles the difference between pretax accounting income and taxable income. Using the schedule, are the necessary journal entry to record income taxes for 2018.

3rd Edition

ISBN:9781337788281

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

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

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 18E