In: Accounting
[The following information applies to the questions
displayed below.]
Arndt, Inc. reported the following for 2021 and 2022 ($ in
millions):
2021 | 2022 | ||||||
Revenues | $ | 956 | $ | 1,048 | |||
Expenses | 812 | 868 | |||||
Pretax accounting income (income statement) | $ | 144 | $ | 180 | |||
Taxable income (tax return) | $ | 88 | $ | 214 | |||
Tax rate: 25% | |||||||
3. Compute the deferred tax amounts that should be reported on the 2021 balance sheet. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)
Please the answer for 3
Solution 3:
Tax schedule showing reconciliation between pre tax financial income, taxable income, deferred tax account (In millions) - Arndt Inc. | |||
Particulars | Current Year - 2021 | Future Taxable Amount | Future Deductible Amount |
FT - DTL | FD - DTA | ||
Pretax accounting income | $144.00 | ||
Permanent Differences: | |||
Life insurance premium | $2.00 | ||
Temporary Differences: | |||
Casualty insurance expense | -$74.00 | $74.00 | |
Subscriptions - 2021 | -$54.00 | ||
Subscriptions - 2022 | $60.00 | $60.00 | |
Unrealized loss | $58.00 | $58.00 | |
Loss contigency | -$48.00 | ||
Taxable Income | $88.00 | ||
$74.00 | $118.00 | ||
Tax rate | 25% | 25% | 25% |
Tax payable currently | $22.00 | ||
Deferred tax liability | $18.50 | ||
Deferred tax assets | $29.50 | ||
Deferred tax liability | Deferred tax Assets | ||
Ending balances (balances currently needed) | $18.50 | $29.50 | |
Less: Beginning balances | $0.00 | $4.00 | |
Changes needed to achieve desired balances | $18.50 | $25.50 |
Deferred tax amounts ($ in millions) | |
Classification | Amount |
Deferred tax liability | $18.50 |
Deferred tax assets | $29.50 |
Net Non current deferred tax assets | $11.00 |