Problem 16-8 (Algo) Multiple differences; taxable income given; two years; balance sheet classification; change in tax rate [LO16-1, 16-2, 16-3, 16-5, 16-6, 16-8] 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%

1. 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.
2. Expenses include $2 million insurance premiums each year for life insurance on key executives.
3. Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2021 and 2022 were $49 million and $65 million, respectively. Subscriptions included in 2021 and 2022 financial reporting revenues were $43 million ($28 million collected in 2020 but not recognized as revenue until 2021) and $49 million, respectively. Hint: View this as two temporary differencesone reversing in 2021; one originating in 2021.
4. 2021 expenses included a $32 million unrealized loss from reducing investments (classified as trading securities) to fair value. The investments were sold and the loss realized in 2022.
5. During 2020, accounting income included an estimated loss of $22 million from having accrued a loss contingency. The loss was paid in 2021, at which time it is tax deductible.
6. At January 1, 2021, Arndt had a deferred tax asset of $4 million and no deferred tax liability.

6. Suppose that during 2022, tax legislation was passed that will lower Arndts effective tax rate to 15% beginning in 2023. Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. Using the schedule, prepare the necessary journal entry to record income taxes for 2022.

Suppose that during 2022, tax legislation was passed that will lower Arndts effective tax rate to 15% beginning in 2023. Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)

($ in millions)	Current Year 2022	Future Taxable Amounts [2023]	Future Deductible Amounts [2023]
Pretax accounting income
Permanent difference:
Life insurance premiums
Temporary differences:
Casualty insurance (reversing)
Subscriptions2021
Subscriptions2022
Unrealized loss (reversing)
Taxable income (income tax return)	0.0
Enacted tax rate (%)
Tax payable currently
Deferred tax liability
Deferred tax asset

Note: Enter debits before credits.

Record 2022 Income Taxes

Transaction	General Journal	Debit	Credit
1