Arndt, Inc, report the following for 2018 and 2019 ($ in millions):

2018 2019 Revenues $ 996 $1,031 Expenses 784 824 Pretax accounting income (income statement) $ 212 $ 207 Taxable income (tax return) $ 210 $ 230 Tax rate: 40%

a. Expenses each year include $30 million from a two-year casualty insurances policy purchased in 2018 for $60 million. The cost is tax deductible in 20818. b. Expenses include $3 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 2018 and 2019 were $36 million and $48 million, respectively. Subscriptions included in 2018 and 2019 financial reporting revenues were $28 million ($10 million collected in 2017 but not recognized as revenue until 2018) and $36 million, respectively. Hint: View this as two temporary differences-one reversing in 2018: one originating in 2018. d. 2018 expenses included a $22 million unrealized loss from reducing investments (classified as trading securities) to fair value. The investments were sold in 2019. e. During 2017, accounting income included an estimated loss of $5million from having accrued a loss contingency. The loss was paid in 2018 at which time it is tax deductible. f. At January 1, 2018, Arndt had a deferred tax asset of $7 million and no deferred tax liability.

3. Compute the deferred tax amounts that should be reported on the2018 balance sheet (enter your answered in millions (i.e., 10,000,000 should be entered as 10)

DEFFERRED TAX AMONUNTS ($ IN MILLIONS) CLASSIFICATION AMOUNT Net noncurrent deferred tax asset or Net noncurrent deferred tax liability