Arndt, Incorporated reported the following for 2024 and 2025 ($ in millions): Revenues Expenses 2024 $...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Arndt, Incorporated reported the following for 2024 and 2025 ($ in millions): Revenues Expenses 2024 $ 888 760 Pretax accounting income (income statement) Taxable income (tax return) $ 128 $ 116 2025 $ 980 800 $ 180 $ 200 Tax rate: 25% a. Expenses each year include $30 million from a two-year casualty insurance policy purchased in 2024 for $60 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 $33 million and $35 million, respectively. Subscriptions included in 2024 and 2025 financial reporting revenues were $25 million ($10 million collected in 2023 but not recognized as revenue until 2024) and $33 million, respectively. (Hint: View this as two temporary differences-one reversing in 2024; one originating in 2024.) d. 2024 expenses included a $14 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 $6 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 $4 million and no deferred tax liability. 3. Compute the deferred tax amounts that should be reported on the 2024 balance sheet. Note: Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). Answer is complete but not entirely correct. Deferred tax amounts ($ in millions) Classification Amount Net noncurrent deferred tax asset 8.0 Net noncurrent deferred tax liability $ 7.5 X Arndt, Incorporated reported the following for 2024 and 2025 ($ in millions): Revenues Expenses 2024 $ 888 760 Pretax accounting income (income statement) Taxable income (tax return) $ 128 $ 116 2025 $ 980 800 $ 180 $ 200 Tax rate: 25% a. Expenses each year include $30 million from a two-year casualty insurance policy purchased in 2024 for $60 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 $33 million and $35 million, respectively. Subscriptions included in 2024 and 2025 financial reporting revenues were $25 million ($10 million collected in 2023 but not recognized as revenue until 2024) and $33 million, respectively. (Hint: View this as two temporary differences-one reversing in 2024; one originating in 2024.) d. 2024 expenses included a $14 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 $6 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 $4 million and no deferred tax liability. 3. Compute the deferred tax amounts that should be reported on the 2024 balance sheet. Note: Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). Answer is complete but not entirely correct. Deferred tax amounts ($ in millions) Classification Amount Net noncurrent deferred tax asset 8.0 Net noncurrent deferred tax liability $ 7.5 X
Expert Answer:
Related Book For
Posted Date:
Students also viewed these accounting questions
-
George operates a business that generated adjusted gross income of $250,000 and taxable income of $170,000 this year (before the domestic production activities deduction). Included in income was...
-
In 2012 the Keenan Company paid dividends totalling $850,000 on net income of $4.25 million. 2012 was a normal year, and for the past 10 years, earnings have grown at a constant rate of 6%. However,...
-
For both financial reporting purposes and tax purposes. (Assume the carryback provision is used for a net operating loss.) The tax rates listed were all enacted by the beginning of 2017. Instructions...
-
We may use Eq. (11.16) to generate sample paths of the generalized Wiener process by Monte Carlo sampling. We rewrite the equation for a small time step , and express the increment of the Wiener...
-
Milton Consulting completed the following petty cash transactions during February 2014: Feb. 2 Prepared a $400 cheque, cashed it, and gave the proceeds and the petty cash box to Nick Reed, the petty...
-
Pharoah had the following account balances at December 3 1 , 2 0 2 3 : Cash $ 2 4 , 0 0 0 Accumulated Depreciation, Equipment 2 5 , 0 0 0 Accounts Receivable 2 5 , 0 0 0 Wages Payable 6 , 0 0 0...
-
Consider N farmers, each of whom can produce the same quantity of wheat at zero cost as they wish. If the k th farmer produces q k , the total quantity produced is q = q 1 + q 2 + ... q k + ... + q N...
-
The estimated supply function for avocados is Q = 58 + 15p - 20pf, where p is the price of avocados and pf is the price of fertilizer. The price elasticity of supply, estimated at p = 4 and pf = 10,...
-
The Tillamook Dairy Cooperative makes cheddar cheese and the market structure of the cheddar cheese industry is monopolistic competition. Suppose that currently each cheese making firm incurs a loss....
-
Find the value of x that makes the equivalent annual worth in years 1 through 10 equal to $400 per year. Use an interest rate of 10% per year. The cash flows in year 0 and year 10 has an unknown...
-
Your roommate, Allison Albright, is a non-business major. When she discovered that you are taking a course in Organizational Behavior, she was thoroughly confused as to why one would need to study OB...
-
Consider the following pairs of goods. For which of the two goods would you expect the demand to be more price elastic? Why? (In order to receive full credit for your answer, be sure to provide...
-
Use the graphing examples in the exercise to consider such things as the benefits of graphing in science, how graphs are constructed, the significance of the x and y axes, how to properly label the...
-
1. Using the information from Problem 16-4B, prepare a statement of cash flows for Lim Garden Supplies Inc. using the direct method of presenting cash flows from operating activities. 2. How does Lim...
-
Describe the issues that you considered in each of these facets when you made a recent important purchase.
-
The area of a rectangle is calculated according to the following formula: Design a function that accepts a rectangles width and length as arguments and returns the rectangles area. Use the function...
-
Design a program that gives simple math quizzes. The program should display two random numbers that are to be added, such as: The program should allow the student to enter the answer. If the answer...
Study smarter with the SolutionInn App