Required information[The following information applies to the questions displayed below.]Arndt, Inc. reported the following for 2021 and 2022 ($ in millions):20212022$ 940$1,032852RevenuesExpensesPretax accounting income (income statement)Taxable income (tax return)796$ 144$ 104180%24214Tax rate: 25%a. Expenses each year include $58 million from a two-year casualty insurance policy purchased in 2021 for $116 million.The cost is tax deductible in 2021.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 2021 and 2022 were$59 million and $75 million, respectively. Subscriptions included in 2021 and 2022 financial reporting revenues were$53 million ($38 million collected in 2020 but not recognized as revenue until 2021) and $59 million, respectively. Hint.View this as two temporary differences-one reversing in 2021; one originating in 2021.d. 2021 expenses included a $42 million unrealized loss from reducing investments (classified as trading securities) to fairvalue. The investments were sold and the loss realized in 2022.e. During 2020, accounting income included an estimated loss of $32 million from having accrued a loss contingency.The loss was paid in 2021, at which time it is tax deductible.f. At January 1, 2021, Arndt had a deferred tax asset of $4 million and no deferred tax liability.2. Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. Using the schedule,prepare the necessary journal entry to record income taxes for 2021.Complete this auection hy entering vour answers in the tahs helow Required 1Required 2Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. (Amounts to bededucted should be indicated with a minus sign. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000should be entered as 5.5).)Future TaxableAmounts [2022]FutureDeductibleAmounts [2022]Current($ in millions)Year 2021Pretax accounting income$180.0Permanent difference:Life insurance premiumsTemporary differences:Casualty insurance expenseSubscriptions-2020Subscriptions-2021Unrealized lossLoss contingencyTaxable income$180.02$0.0Enacted tax rate (%)Tax payable currentlyDeferred tax liabilityDeferred tax assetRequired 1Required 2Prepare the necessary journal entry to record income taxes for 2021. (If no entry is required for a transactionentry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,505.5).)View transaction listJournal entry worksheet1Record 2021 income taxes.Note: Enter debits before credits.TransactionGeneral JournalDebitCredit1

Deferred Tax Assets: It shows the amount of advance tax that a company has paid in excess of the…

year casualty insurance policy purchased in 2021 for $116 million ch year for life insurance on key executives. al. Subscription sales collected and taxable in 2021 and 2022 we ons included in 2021 and 2022 financial reporting revenues were

year casualty insurance policy purchased in 2021 for $116 million ch year for life insurance on key executives. al. Subscription sales collected and taxable in 2021 and 2022 we ons included in 2021 and 2022 financial reporting revenues were

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Computing Amortization of Pension Gain/Loss On January 1, K. Crew Inc. reported a $16,800 credit balance in its Accumulated OCI-Pension Gain/Loss account related to its pension plan. During the year, the following events occurred. • Actual return on plan assets was $22,400, and expected return was $28,000. A gain on the PBO of $11,200 was determined by the actuary at December 31, based on changes in actuarial assumptions. K. Crew amortizes unrecognized gains and losses using the corridor approach over the average remaining service life of active employees (20 years for this year and next year). Further information on this plan follows. Jan. 1 Dec. 31 PBO $140,000 $156,800 Fair value of plan assets 84,000 95,200
FINANCIAL ACCOUNTING II Lee Electronics, Inc. reported the following information related to its defined- benefit pension plan at December 31, 2021: Projected benefit obligation ..... $320,000 $400,000 Pension plan assets, at market value ...... The plan was subject to the following activity during 2022: a) Lee's actuary confirmed that the service cost for the plan during the year was $60,000. b) The applicable interest rate for pension matters was 5%. c) Early in 2019, an amendment to the plan resulted in prior service cost of $40,000. Each year, one-tenth of this cost is amortized to expense. d) The pension plan asset balance at December 31st, at market value, was $445,000. Lee contributed $30,000 to the fund in 2022, and plan participants received $20,000 in benefits during the year. There were no significant actuarial gains or losses for the plan during 2022. Based on the above information, determine Lee Electronics, Inc.'s pension expense for the year ended December 31, 2022.…
Knowledge Check 01Calder Company has a defined benefit pension plan. Pension-related data for the current calendar year are shown below: Average remaining service period of active employees 12 years Net gain, January 1 $ 214,600 PBO, January 1 1,630,000 Plan assets, January 1 1,930,000 What is the amount of the amortization of the net loss or gain that should be included as a component of pension expense for the current year?
Subject: accounting
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