Solution 1:
Casualty Insurance expense - Temporary difference
Life insurance premium - Permanent difference
Subscriptions - Temporary difference
Unrealized loss on trading securities - Temporary difference
Loss contingency - Temporary difference
Solution 2-1:
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 | -$72.00 | $72.00 | |
Subscriptions - 2021 | -$52.00 | ||
Subscriptions - 2022 | $58.00 | $58.00 | |
Unrealized loss | $56.00 | $56.00 | |
Loss contigency | -$46.00 | ||
Taxable Income | $90.00 | ||
$72.00 | $114.00 | ||
Tax rate | 25% | 25% | 25% |
Tax payable currently | $22.50 | ||
Deferred tax liability | $18.00 | ||
Deferred tax assets | $28.50 | ||
Deferred tax liability | Deferred tax Assets | ||
Ending balances (balances currently needed) | $18.00 | $28.50 | |
Less: Beginning balances | $0.00 | $4.00 | |
Changes needed to achieve desired balances | $18.00 | $24.50 |
Solution 2-2:
Journal Entries | |||
Date | Particulars | Debit | Credit |
31-Dec-21 | Income tax expense Dr | $16.00 | |
Deferred tax Assets Dr | $24.50 | ||
To Income tax payable | $22.50 | ||
To Deferred tax liability | $18.00 | ||
(To record income tax expense and deferred taxes) |
Required information [The following information applies to the questions displayed below.) Arndt, Inc. reported the following...
Required information [The following information applies to the questions displayed below.) Arndt, Inc. reported the following for 2021 and 2022 ($ in millions): Revenues Expenses Pretax accounting income (income statement) Taxable income (tax return) Tax rate: 25% 2021 $ 942 798 $ 144 $ 102 2022 $1,034 854 $ 180 $ 214 a. Expenses each year include $60 million from a two-year casualty insurance policy purchased in 2021 for $120 million. The cost is tax deductible in 2021. b. Expenses...
Required information [The following information applies to the questions displayed below.) Arndt, Inc. reported the following for 2021 and 2022 ($ in millions): Revenues Expenses Pretax accounting income (income statement) Taxable income (tax return) Tax rate: 258 2021 $ 930 786 $ 144 $ 114 2022 $1,022 842 $ 180 $ 214 a. Expenses each year include $48 million from a two-year casualty insurance policy purchased in 2021 for $96 million. The cost is tax deductible in 2021. b. Expenses...
[The following information applies to the questions displayed below.] Arndt, Inc. reported the following for 2021 and 2022 ($ in millions): 2021 2022 Revenues $ 944 $ 1,036 Expenses 800 856 Pretax accounting income (income statement) $ 144 $ 180 Taxable income (tax return) $ 100 $ 238 Tax rate: 25% Expenses each year include $62 million from a two-year casualty insurance policy purchased in 2021 for $100 million. The cost is tax deductible in 2021. Expenses include $2 million...
Required information [The following information applies to the questions displayed below.] Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): 2018 2019 $ 983 $ 888 Revenues Expenses Pretax accounting income (income statement) Taxable income (tax return) 760 800 $ 128 $ 120 $ 183 $ 200 Tax rate: 40% a. Expenses each year include $30 million from a two-year casualty insurance policy purchased in 2018 for $60 million. The cost is tax deductible in 2018. b....
Required information {The following information applies to the questions displayed below.) Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): Revenues Expenses Pretax accounting income (income statement) Taxable income (tax return) Tax rate: 408 2018 $ 896 766 $ 130 $ 125 2019 $ 993 806 $ 187 $ 210 a. Expenses each year include $30 million from a two-year casualty insurance policy purchased in 2018 for $60 million. The cost is tax deductible in 2018 b....
Arndt, Inc. reported the following for 2021 and 2022 ($ 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 $2 million insurance premiums each year for life insurance on key...
Required information [The following information applies to the questions displayed below.] Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): 2018 2019 Revenues $ 990 $ 1,042 Expenses 790 830 Pretax accounting income (income statement) $ 200 $ 212 Taxable income (tax return) $ 190 $ 230 Tax rate: 40% Expenses each year include $30 million from a two-year casualty insurance policy purchased in 2018 for $60 million. The cost is tax deductible in 2018. Expenses include...
Required information [The following information applies to the questions displayed below.] Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): 2018 2019 Revenues $ 990 $ 1,042 Expenses 790 830 Pretax accounting income (income statement) $ 200 $ 212 Taxable income (tax return) $ 190 $ 230 Tax rate: 40% Expenses each year include $30 million from a two-year casualty insurance policy purchased in 2018 for $60 million. The cost is tax deductible in 2018. Expenses include...
Arndt, Inc. reported the following for 2021 and 2022 ($ in millions): 2021 2022 Revenues $ 930 $ 1,022 Expenses 786 842 Pretax accounting income (income statement) $ 144 $ 180 Taxable income (tax return) $ 114 $ 214 Tax rate: 25% Expenses each year include $48 million from a two-year casualty insurance policy purchased in 2021 for $96 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): Revenues Expenses Pretax accounting income (income statement) Taxable income tax return) Tax rate: 25% 2021 $ 950 806 $ 144 $ 94 2022 $1,042 862 $ 180 $ 244 a. Expenses each year include $68 million from a two-year casualty insurance policy purchased in 2021 for $94 million. The cost is tax deductible in 2021. b. Expenses include $2 million insurance premiums each year for life insurance on...