Exercise $16-18($Algo$)$ Change in tax rates; calculate taxable income $[$LO$16-2,16-6]$

Arnold Industries has pretax accounting income of $$168$ million for the year ended December $31,2024.$ The tax rate is $25\%.$ The only difference between accounting income and taxable income relates to an operating lease in which Arnold is the lessee. The inceptlon of the lease was December $28,2024.$ An $$144$ million advance rent payment at the inceptlon of the lease is tax$-$deductible in $2024$ but, for financial reporting purposes, represents prepaid rent expense to be recognized equally over the four$-$year lease term.

Required:

Complete the following table given below and prepare the appropriate journal entry to record Arnold's income taxes for $2024.$

Prepare the appropriate journal entry to record Arnold's income taxes for $2025.$ Pretax accounting income was $$220$ million for the year ended December $31,2025.$

Assume a new tax law is enacted in $2025$ that causes the tax rate to change from $25\%$ to $15\%$ beginning in $2026.$ Complete the following table given below and prepare the approprlate journal entry to record Arnold's income taxes for $2025.$

Complete this question by entering your answers in the tabs below.

Required $1$

Calculation

Required $1$ GJ

Required $2$

Required $3$

Calculation

Required $3$ GJ

Prepare the appropriate journal entry to record Arnold's income taxes for $2025.$ Pretax accounting income was $$220$ million for the ended December $31,2025.$

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Enter your answe millions rounded to $1$ decimal place $(1.$e$.,5,500,000$ should be entered as $5\mathrm{.}5).$

Show $1$

Journal entry worksheet

$1$

Record $2025$ income taxes.

Note: Enter debits before credits.

$\backslash$table$[[$Transaction$,$General Journal,Deblt,Credit$],[1,$Income tax expense,,$],[,$Deferred tax llability,,$],[,$Income tax payable,,$]]$