Arnold Industries has pretax accounting income of $34 million for the year ended December 31, 2018. The tax rate is 40%. The only difference between accounting income and taxable income relates to an operating lease in which Arnold is the lessee. The inceptio of the lease was December 28, 2018. An $4 million advance rent payment at the inception of the lease is tax-deductible in 2018 but, for financial reporting purposes, represents prepaid rent expense to be recognized equally over the four-year lease term. Required: 1. Complete the following table given below and prepare the appropriate journal entry to record Arnold's income taxes for 2018. 2. Prepare the appropriate journal entry to record Arnold's income taxes for 2019. Pretax accounting income was $42 million for the year ended December 31, 2019. 3. Assume a new tax law is enacted in 2019 that causes the tax rate to change from 40% to 30% beginning in 2020. Complete the following table given below and prepare the appropriate journal entry to record Arnold's income taxes for 2019. Complete this question by entering your answers in the tabs below. Required 1 Calculation Required 3 Calculation Required 1 GJ Required 2 Required 3 GJ Complete the following table given below to record Arnold's income taxes for 2018. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) (S in millions) Tax Rate % Таx $ Recorded as: Pretax accounting income Rent costs reversing in: 34.0 2019 %3D 2020 %3D 2021 %3D 2022 %3D Total deferred tax amount Income taxable in current year < Required 1 Calculation Required 1 GJ > I ||||
Arnold Industries has pretax accounting income of $34 million for the year ended December 31, 2018. The tax rate is 40%. The only difference between accounting income and taxable income relates to an operating lease in which Arnold is the lessee. The inceptio of the lease was December 28, 2018. An $4 million advance rent payment at the inception of the lease is tax-deductible in 2018 but, for financial reporting purposes, represents prepaid rent expense to be recognized equally over the four-year lease term. Required: 1. Complete the following table given below and prepare the appropriate journal entry to record Arnold's income taxes for 2018. 2. Prepare the appropriate journal entry to record Arnold's income taxes for 2019. Pretax accounting income was $42 million for the year ended December 31, 2019. 3. Assume a new tax law is enacted in 2019 that causes the tax rate to change from 40% to 30% beginning in 2020. Complete the following table given below and prepare the appropriate journal entry to record Arnold's income taxes for 2019. Complete this question by entering your answers in the tabs below. Required 1 Calculation Required 3 Calculation Required 1 GJ Required 2 Required 3 GJ Complete the following table given below to record Arnold's income taxes for 2018. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) (S in millions) Tax Rate % Таx $ Recorded as: Pretax accounting income Rent costs reversing in: 34.0 2019 %3D 2020 %3D 2021 %3D 2022 %3D Total deferred tax amount Income taxable in current year < Required 1 Calculation Required 1 GJ > I ||||
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 9MC: Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and...
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Transcribed Image Text:Arnold Industries has pretax accounting income of $34 million for the year ended December 31, 2018. The tax rate is 40%. The only
difference between accounting income and taxable income relates to an operating lease in which Arnold is the lessee. The inception
of the lease was December 28, 2018. An $4 million advance rent payment at the inception of the lease is tax-deductible in 2018 but,
for financial reporting purposes, represents prepaid rent expense to be recognized equally over the four-year lease term.
Required:
1. Complete the following table given below and prepare the appropriate journal entry to record Arnold's income taxes for 2018.
2. Prepare the appropriate journal entry to record Arnold's income taxes for 2019. Pretax accounting income was $42 million for the
year ended December 31, 2019.
3. Assume a new tax law is enacted in 2019 that causes the tax rate to change from 40% to 30% beginning in 2020. Complete the
following table given below and prepare the appropriate journal entry to record Arnold's income taxes for 2019.
Complete this question by entering your answers in the tabs below.
Required 1
Calculation
Required 3
Calculation
Required 1 GJ Required 2
Required 3 GJ
Complete the following table given below to record Arnold's income taxes for 2018. (Enter your answers in millions rounded to 1
decimal place (i.e., 5,500,000 should be entered as 5.5).)
($ in millions)
Tax Rate %
Tax $
Recorded as:
Pretax accounting income
Rent costs reversing in:
$
34.0
2019
X
2020
X
2021
2022
Total deferred tax amount
Income taxable in current year
< Required 1 Calculation
Required 1 GJ >
I|| ||
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