Question

In: Accounting

Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): 2018 2019 Revenues $...

Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): 2018 2019 Revenues $ 996 $ 1,031 Expenses 784 824 Pretax accounting income (income statement) $ 212 $ 207 Taxable income (tax return) $ 210 $ 230 Tax rate: 40% 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. Expenses include $3 million insurance premiums each year for life insurance on key executives. Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2018 and 2019 were $36 million and $48 million, respectively. Subscriptions included in 2018 and 2019 financial reporting revenues were $28 million ($10 million collected in 2017 but not recognized as revenue until 2018) and $36 million, respectively. Hint: View this as two temporary differences—one reversing in 2018; one originating in 2018. 2018 expenses included a $22 million unrealized loss from reducing investments (classified as trading securities) to fair value. The investments were sold in 2019. During 2017, accounting income included an estimated loss of $5 million from having accrued a loss contingency. The loss was paid in 2018 at which time it is tax deductible. At January 1, 2018, Arndt had a deferred tax asset of $7 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 2018.

Solutions

Expert Solution


Related Solutions

Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): 2018 2019 Revenues $...
Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): 2018 2019 Revenues $ 913 $ 988 Expenses 770 810 Pretax accounting income (income statement) $ 143 $ 178 Taxable income (tax return) $ 135 $ 200 Tax rate: 40% 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. Expenses include $2 million insurance premiums each year for life insurance on key...
Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): 2018 2019 Revenues $...
Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): 2018 2019 Revenues $ 996 $ 1,031 Expenses 784 824 Pretax accounting income (income statement) $ 212 $ 207 Taxable income (tax return) $ 210 $ 230 Tax rate: 40% 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. Expenses include $3 million insurance premiums each year for life insurance on key...
Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): 2018 2019 Revenues $...
Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): 2018 2019 Revenues $ 893 $ 992 Expenses 764 804 Pretax accounting income (income statement) $ 129 $ 188 Taxable income (tax return) $ 130 $ 200 Tax rate: 40% Expenses each year include $20 million from a two-year casualty insurance policy purchased in 2018 for $40 million. The cost is tax deductible in 2018. Expenses include $2 million insurance premiums each year for life insurance on key...
Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): PLEASE FILL IN THE...
Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): PLEASE FILL IN THE BLANKS 2018 2019 Revenues $ 995 $ 1,055 Expenses 798 838 Pretax accounting income (income statement) $ 197 $ 217 Taxable income (tax return) $ 185 $ 255 Tax rate: 40% Expenses each year include $40 million from a two-year casualty insurance policy purchased in 2018 for $80 million. The cost is tax deductible in 2018. Expenses include $3 million insurance premiums each year...
Arndt, Inc. reported the following for 2021 and 2022 ($ in millions): 2021 2022 Revenues $...
Arndt, Inc. reported the following for 2021 and 2022 ($ in millions): 2021 2022 Revenues $ 944 $ 1,036 Expenses 800 856 Pretax accounting income (income statement) $ 144 $ 180 Taxable income (tax return) $ 100 $ 214 Tax rate: 25% Expenses each year include $62 million from a two-year casualty insurance policy purchased in 2021 for $124 million. The cost is tax deductible in 2021. Expenses include $2 million insurance premiums each year for life insurance on key...
Arndt, Inc. reported the following for 2021 and 2022 ($ in millions): 2021 2022 Revenues $...
Arndt, Inc. reported the following for 2021 and 2022 ($ in millions): 2021 2022 Revenues $ 954 $ 1,046 Expenses 810 866 Pretax accounting income (income statement) $ 144 $ 180 Taxable income (tax return) $ 90 $ 214 Tax rate: 25% Expenses each year include $72 million from a two-year casualty insurance policy purchased in 2021 for $144 million. The cost is tax deductible in 2021. Expenses include $2 million insurance premiums each year for life insurance on key...
[The following information applies to the questions displayed below.] Arndt, Inc., reported the following for 2018...
[The following information applies to the questions displayed below.] Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): 2018 2019 Revenues $ 904 $ 1,009 Expenses 772 812 Pretax accounting income (income statement) $ 132 $ 197 Taxable income (tax return) $ 125 $ 235 Tax rate: 40% Expenses each year include $40 million from a two-year casualty insurance policy purchased in 2018 for $80 million. The cost is tax deductible in 2018. Expenses include $3 million...
rndt, Inc. reported the following for 2021 and 2022 ($ in millions): 2021 2022 Revenues $...
rndt, Inc. reported the following for 2021 and 2022 ($ in millions): 2021 2022 Revenues $ 944 $ 1,036 Expenses 800 856 Pretax accounting income (income statement) $ 144 $ 180 Taxable income (tax return) $ 100 $ 214 Tax rate: 25% Expenses each year include $62 million from a two-year casualty insurance policy purchased in 2021 for $124 million. The cost is tax deductible in 2021. Expenses include $2 million insurance premiums each year for life insurance on key...
[The following information applies to the questions displayed below.] Arndt, Inc. reported the following for 2021...
[The following information applies to the questions displayed below.] Arndt, Inc. reported the following for 2021 and 2022 ($ 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% Expenses each year include $74 million from a two-year casualty insurance policy purchased in 2021 for $148 million. The cost is tax deductible in 2021. Expenses include $2 million...
Required information [The following information applies to the questions displayed below.] Arndt, Inc. reported the following...
Required information [The following information applies to the questions displayed below.] Arndt, Inc. reported the following for 2021 and 2022 ($ in millions): 2021 2022 Revenues $ 888 $ 980 Expenses 760 800 Pretax accounting income (income statement) $ 128 $ 180 Taxable income (tax return) $ 116 $ 200 Tax rate: 25% Expenses each year include $30 million from a two-year casualty insurance policy purchased in 2021 for $60 million. The cost is tax deductible in 2021. Expenses include...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT