Required information [The following information applies to the questions displayed below.] Arndt, Incorporated reported the following for 2024 and 2025 ($ in millions): Revenues Expenses Pretax accounting income (income statement) Taxable income (tax return) Tax rate: 25% 2024 $ 954 810 $ 144 $90 2025 $ 1,046 866 $ 180 $ 214 a. Expenses each year include $72 million from a two-year casualty insurance policy purchased in 2024 for $144 million. The cost is tax deductible in 2024. 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 2024 and 2025 were $73 million and $89 million, respectively. Subscriptions included in 2024 and 2025 financial reporting revenues were $67 million ($50 million collected in 2023 but not recognized as revenue until 2024) and $73 million, respectively. Hint. View this as two temporary differences-one reversing in 2024; one originating in 2024. d. 2024 expenses included a $56 million unrealized loss from reducing investments (classified as trading securities) to fair value. The investments were sold and the loss realized in 2025. e. During 2023, accounting income included an estimated loss of $46 million from having accrued a loss contingency. The loss was paid in 2024, at which time it is tax deductible. f. At January 1, 2024, Arndt had a deferred tax asset of $24 million and no deferred tax liability. 6. Suppose that during 2025, tax legislation was passed that will lower Arndt's effective tax rate to 15% beginning in 2026. Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. Using the schedule, prepare the necessary journal entry to record income taxes for 2025.
Required information [The following information applies to the questions displayed below.] Arndt, Incorporated reported the following for 2024 and 2025 ($ in millions): Revenues Expenses Pretax accounting income (income statement) Taxable income (tax return) Tax rate: 25% 2024 $ 954 810 $ 144 $90 2025 $ 1,046 866 $ 180 $ 214 a. Expenses each year include $72 million from a two-year casualty insurance policy purchased in 2024 for $144 million. The cost is tax deductible in 2024. 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 2024 and 2025 were $73 million and $89 million, respectively. Subscriptions included in 2024 and 2025 financial reporting revenues were $67 million ($50 million collected in 2023 but not recognized as revenue until 2024) and $73 million, respectively. Hint. View this as two temporary differences-one reversing in 2024; one originating in 2024. d. 2024 expenses included a $56 million unrealized loss from reducing investments (classified as trading securities) to fair value. The investments were sold and the loss realized in 2025. e. During 2023, accounting income included an estimated loss of $46 million from having accrued a loss contingency. The loss was paid in 2024, at which time it is tax deductible. f. At January 1, 2024, Arndt had a deferred tax asset of $24 million and no deferred tax liability. 6. Suppose that during 2025, tax legislation was passed that will lower Arndt's effective tax rate to 15% beginning in 2026. Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. Using the schedule, prepare the necessary journal entry to record income taxes for 2025.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Please do not give image format and fast answering
![Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Suppose that during 2025, tax legislation was passed that will lower Arndt's effective tax rate to 15% beginning in 2026.
Prepare a schedule that reconciles the difference between pretax accounting income and taxable income.
Note: Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions rounded to 1 decimal
place (i.e., 5,500,000 should be entered as 5.5).
($ in millions)
Pretax accounting income
Permanent difference:
Life insurance premiums
Temporary differences:
Casualty insurance (reversing)
Subscriptions-2024
Subscriptions-2025
Unrealized loss (reversing)
Taxable income (income tax return)
Answer is complete but not entirely correct.
Enacted tax rate (%)
Tax payable currently
Deferred tax liability
Deferred tax asset
Current
Year 2025
180.0
2.0
72.0
(56.0)
72.0
(56.0)
214.0
25%
53.5
Future Taxable
Amounts
[2026]
15%
Future
Deductible
Amounts
[2026]
(72.0)
(72.0)
15%
8.5 X
Show less](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1d72098e-f97d-4ea0-8435-511265d0100e%2F7fbc0581-9742-4066-9705-34ffca946b12%2Fku38c76_processed.png&w=3840&q=75)
Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Suppose that during 2025, tax legislation was passed that will lower Arndt's effective tax rate to 15% beginning in 2026.
Prepare a schedule that reconciles the difference between pretax accounting income and taxable income.
Note: Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions rounded to 1 decimal
place (i.e., 5,500,000 should be entered as 5.5).
($ in millions)
Pretax accounting income
Permanent difference:
Life insurance premiums
Temporary differences:
Casualty insurance (reversing)
Subscriptions-2024
Subscriptions-2025
Unrealized loss (reversing)
Taxable income (income tax return)
Answer is complete but not entirely correct.
Enacted tax rate (%)
Tax payable currently
Deferred tax liability
Deferred tax asset
Current
Year 2025
180.0
2.0
72.0
(56.0)
72.0
(56.0)
214.0
25%
53.5
Future Taxable
Amounts
[2026]
15%
Future
Deductible
Amounts
[2026]
(72.0)
(72.0)
15%
8.5 X
Show less
![!
Required information
[The following information applies to the questions displayed below.]
Arndt, Incorporated reported the following for 2024 and 2025 ($ in millions):
Revenues
Expenses
Pretax accounting income (income statement)
Taxable income (tax return)
Tax rate: 25%
2024
$ 954
810
$ 144
$ 90
2025
$ 1,046
866
$ 180
$ 214
a. Expenses each year include $72 million from a two-year casualty insurance policy purchased in 2024 for $144
million. The cost is tax deductible in 2024.
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 2024 and 2025
were $73 million and $89 million, respectively. Subscriptions included in 2024 and 2025 financial reporting
revenues were $67 million ($50 million collected in 2023 but not recognized as revenue until 2024) and $73 million,
respectively. Hint. View this as two temporary differences-one reversing in 2024; one originating in 2024.
d. 2024 expenses included a $56 million unrealized loss from reducing investments (classified as trading securities) to
fair value. The investments were sold and the loss realized in 2025.
e. During 2023, accounting income included an estimated loss of $46 million from having accrued a loss contingency.
The loss was paid in 2024, at which time it is tax deductible.
f. At January 1, 2024, Arndt had a deferred tax asset of $24 million and no deferred tax liability.
6. Suppose that during 2025, tax legislation was passed that will lower Arndt's effective tax rate to 15% beginning in 2026. Prepare a
schedule that reconciles the difference between pretax accounting income and taxable income. Using the schedule, prepare the
necessary journal entry to record income taxes for 2025.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1d72098e-f97d-4ea0-8435-511265d0100e%2F7fbc0581-9742-4066-9705-34ffca946b12%2Fte2uhhl_processed.png&w=3840&q=75)
Transcribed Image Text:!
Required information
[The following information applies to the questions displayed below.]
Arndt, Incorporated reported the following for 2024 and 2025 ($ in millions):
Revenues
Expenses
Pretax accounting income (income statement)
Taxable income (tax return)
Tax rate: 25%
2024
$ 954
810
$ 144
$ 90
2025
$ 1,046
866
$ 180
$ 214
a. Expenses each year include $72 million from a two-year casualty insurance policy purchased in 2024 for $144
million. The cost is tax deductible in 2024.
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 2024 and 2025
were $73 million and $89 million, respectively. Subscriptions included in 2024 and 2025 financial reporting
revenues were $67 million ($50 million collected in 2023 but not recognized as revenue until 2024) and $73 million,
respectively. Hint. View this as two temporary differences-one reversing in 2024; one originating in 2024.
d. 2024 expenses included a $56 million unrealized loss from reducing investments (classified as trading securities) to
fair value. The investments were sold and the loss realized in 2025.
e. During 2023, accounting income included an estimated loss of $46 million from having accrued a loss contingency.
The loss was paid in 2024, at which time it is tax deductible.
f. At January 1, 2024, Arndt had a deferred tax asset of $24 million and no deferred tax liability.
6. Suppose that during 2025, tax legislation was passed that will lower Arndt's effective tax rate to 15% beginning in 2026. 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 2025.
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