[The following information applies to the questions displayed below.] Arndt, Incorporated reported the following for 2024 and 2025 ($ in millions): Revenues Expenses 2024 $ 940 796 Pretax accounting income (income statement) Taxable income (tax return) $ 144 $ 104 2025 $ 1,032 852 $ 180 $ 214 Tax rate: 25% a. Expenses each year include $58 million from a two-year casualty insurance policy purchased in 2024 for $116 million. The cost is tax deductible in 2024. 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 2024 and 2025 were $59 million and $75 million, respectively. Subscriptions included in 2024 and 2025 financial reporting revenues were $53 million ($36 million collected in 2023 but not recognized as revenue until 2024) and $59 million, respectively. Hint. View this as two temporary differences--one reversing in 2024; one originating in 2024. d. 2024 expenses included a $42 million unrealized loss from reducing investments (classified as trading securities) to fair value. The investments were sold and the loss realized in 2025. e. During 2023, accounting income included an estimated loss of $32 million from having accrued a loss contingency. The loss was paid in 2024, at which time it is tax deductible. f. At January 1, 2024, Arndt had a deferred tax asset of $17 million and no deferred tax liability.
[The following information applies to the questions displayed below.] Arndt, Incorporated reported the following for 2024 and 2025 ($ in millions): Revenues Expenses 2024 $ 940 796 Pretax accounting income (income statement) Taxable income (tax return) $ 144 $ 104 2025 $ 1,032 852 $ 180 $ 214 Tax rate: 25% a. Expenses each year include $58 million from a two-year casualty insurance policy purchased in 2024 for $116 million. The cost is tax deductible in 2024. 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 2024 and 2025 were $59 million and $75 million, respectively. Subscriptions included in 2024 and 2025 financial reporting revenues were $53 million ($36 million collected in 2023 but not recognized as revenue until 2024) and $59 million, respectively. Hint. View this as two temporary differences--one reversing in 2024; one originating in 2024. d. 2024 expenses included a $42 million unrealized loss from reducing investments (classified as trading securities) to fair value. The investments were sold and the loss realized in 2025. e. During 2023, accounting income included an estimated loss of $32 million from having accrued a loss contingency. The loss was paid in 2024, at which time it is tax deductible. f. At January 1, 2024, Arndt had a deferred tax asset of $17 million and no deferred tax liability.
Chapter19: Corporations: Distributions Not In Complete Liquidation
Section: Chapter Questions
Problem 35P
Related questions
Question
Munabhai
![!
Required information
[The following information applies to the questions displayed below.]
Arndt, Incorporated reported the following for 2024 and 2025 ($ in millions):
Revenues
Expenses
2024
$ 940
796
Pretax accounting income (income statement)
Taxable income (tax return)
Tax rate: 25%
$ 144
$ 104
2025
$ 1,032
852
$ 180
$ 214
a. Expenses each year include $58 million from a two-year casualty insurance policy purchased in 2024 for $116
million. The cost is tax deductible in 2024.
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 2024 and 2025
were $59 million and $75 million, respectively. Subscriptions included in 2024 and 2025 financial reporting
revenues were $53 million ($36 million collected in 2023 but not recognized as revenue until 2024) and $59 million,
respectively. Hint. View this as two temporary differences-one reversing in 2024; one originating in 2024.
d. 2024 expenses included a $42 million unrealized loss from reducing investments (classified as trading securities) to
fair value. The investments were sold and the loss realized in 2025.
e. During 2023, accounting income included an estimated loss of $32 million from having accrued a loss contingency.
The loss was paid in 2024, at which time it is tax deductible.
f. At January 1, 2024, Arndt had a deferred tax asset of $17 million and no deferred tax liability.
3. Compute the deferred tax amounts that should be reported on the 2024 balance sheet.
Note: Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).
Deferred tax amounts ($ in millions)
Classification
Amount](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe48c950f-0d32-43fa-9e7e-fd8c2ff0f956%2F5822e12f-63f2-4cc4-8211-9c1e6365f413%2Fmok528_processed.jpeg&w=3840&q=75)
Transcribed Image Text:!
Required information
[The following information applies to the questions displayed below.]
Arndt, Incorporated reported the following for 2024 and 2025 ($ in millions):
Revenues
Expenses
2024
$ 940
796
Pretax accounting income (income statement)
Taxable income (tax return)
Tax rate: 25%
$ 144
$ 104
2025
$ 1,032
852
$ 180
$ 214
a. Expenses each year include $58 million from a two-year casualty insurance policy purchased in 2024 for $116
million. The cost is tax deductible in 2024.
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 2024 and 2025
were $59 million and $75 million, respectively. Subscriptions included in 2024 and 2025 financial reporting
revenues were $53 million ($36 million collected in 2023 but not recognized as revenue until 2024) and $59 million,
respectively. Hint. View this as two temporary differences-one reversing in 2024; one originating in 2024.
d. 2024 expenses included a $42 million unrealized loss from reducing investments (classified as trading securities) to
fair value. The investments were sold and the loss realized in 2025.
e. During 2023, accounting income included an estimated loss of $32 million from having accrued a loss contingency.
The loss was paid in 2024, at which time it is tax deductible.
f. At January 1, 2024, Arndt had a deferred tax asset of $17 million and no deferred tax liability.
3. Compute the deferred tax amounts that should be reported on the 2024 balance sheet.
Note: Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).
Deferred tax amounts ($ in millions)
Classification
Amount
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
