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Arndt, Inc. reported the following for 2021 and 2022 ($ in millions): Revenues Expenses Pretax accounting income (income statement) Taxable income (tax return) Tax rate: 25% 2821 $ 958 788 $ 170 $ 137 2022 $1,888 814 5 198 $ 221 a. Expenses each year include $51 million from a two-year casualty insurance policy purchased in 2021 for $102 million. The cost is tax deductible in 2021 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 2021 and 2022 were $47 million and $49 million, respectively. Subscriptions included in 2021 and 2022 financial reporting revenues were $39 million ($24 million collected in 2020 but not recognized as revenue until 2021) and $47 million, respectively. Hint View this as two temporary differences-one reversing in 2021: one originating in 2021. d. 2021 expenses included a $28 million unrealized loss from reducing investments (classified as trading securities) to fair value. The investments were sold and the loss realized in 2022 e. During 2020, accounting income included an estimated loss of $20 million from having accrued a loss contingency. The loss was paid in 2021. at which time it is tax deductible. f. At January 1, 2021, Arndt had a deferred tax asset of $11 million and no deferred tax liability. Problem 16-8 Part 1 Required: 1. Which of the five differences described in items a-e are temporary and which are permanent differences? a. Casualty insurance expense b. Life insurance premiums C. Subscriptions d. Unrealized loss on trading securities 6. Loss contingency 2. Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. Using the schedule, prepare the necessary journal entry to record income taxes for 2021. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a schedule that reconciles the difference between pretax accounting income and taxa deducted should be indicated with a minus sign. Enter your answers in millions rounded to 1 should be entered as 5.5).) ($ in millions) Current Year 2021 Future Taxable Amounts [2022] Future Deductible Amounts [2022] Pretax accounting income Permanent difference: Life insurance premiums Temporary differences: Casualty insurance expense Subscriptions--2020 Subscriptions-2021 Unrealized loss Loss contingency Taxable income $ 0.0 $ 0.0 Enacted tax rate (%) Tax payable currently Deferred tax liability Deferred tax asset Required Required 2 > 2. 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 2021. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the necessary journal entry to record income taxes for 2021. (If no entry is required entry required" in the first account field. Enter your answers in millions rounded to 1 decimal 5.5).) View transaction list Journal entry worksheet Prepare the necessary journal entry to record income taxes for 2022. (If no entry is required entry required" in the first account field. Enter your answers in millions rounded to 1 decima 5.5).) View transaction list Journal entry worksheet 1 Record 2022 income taxes. Note: Enter debits before credits. Transaction General Journal Debit Credit 1 Record entry Clear entry View general journal 5. Compute the deferred tax amounts that should be reported on the 2022 balance sheet. (Enter your answer in millions (i.e., 10,000,000 should be entered as 10).) Deferred tax amounts ($ in millions) Classification Amount 6. Suppose that during 2022, tax legislation was passed that will lower Arndt's 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Suppose that during 2022, tax legislation was passed that will lower Arndt's effective tax rate Prepare a schedule that reconciles the difference between pretax accounting income and taxa deducted should be indicated with a minus sign. Enter your answers in millions rounded to 1 should be entered as 5.5).) ($ in millions) Current Year 2022 Future Taxable Amounts [2023) Future Dedu Amounts [2 Pretax accounting income Permanent difference: Life insurance premiums Temporary differences: Casualty insurance (reversing) Subscriptions2021 Subscriptions-2022 Unrealized loss (reversing) Taxable income (income tax return) Enacted tax rate (%) Tax payable currently Deferred tax liability Deferred tax asset Recured Required 2 > 6. Suppose that during 2022, tax legislation was passed that will lower Arndt's 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the necessary journal entry to record income taxes for 2022. (If no entry is required entry required" in the first account field. Enter your answers in millions rounded to 1 decimal 5.5).) View transaction list Journal entry worksheet