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

$12\mathrm{.}5$ points

Arnold Industries has pretax accounting income of $$192$ million for the year ended December $31,2024.$ The tax rate is $25\%.$ The only difference between accounting income and taxable income relates to an operating lease in which Arnold is the lessee. The inception of the lease was December $28,2024.$ An $$168$ million advance rent payment at the inception 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 $$250$ 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 appropriate journal entry to record Arnold's income taxes for $2025.$

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

Required $1$

Required $1GJ$

Required $2$

Required $3$

Required $3$ GJ

Complete the following table given below to record Arnold's income taxes for $2024.$

Note: Enter your answers in millions rounded to $1$ decimal place $(1.$e$.,5,500,000$ should be entered as $5\mathrm{.}5).$

$\backslash$table$[[$Pretax accounting income,$($$ in millions$),,$Tax Rate $\%,$Tax $$,$Recorded as:$],[$$$,192\mathrm{.}0,,,,,],[$Rent costs reversing in:$],[2025,,340,x,25\%,=,$$$,85,],[2026,,,x,25\%,=,,,],[2027,,,x,25\%,=,,,],[2028,,,x,25\%,=,,,],[$Total deferred tax amount,,,,,,$$,8\mathrm{.}5,$Deferred tax liability$],[$Income taxable in current year,$$,1580,x,25\%,=,$$$,395,$Income tax payable$]]$

$\backslash$table$[[,($S it$,$lions$),,$Tax Rate $\%,,,$Tax $$,$Recorded as:$],[$Pretax accounting income,$$,192\mathrm{.}0,,,,,,],[$Rent costs reversing in:$],[2025,,340,x,25\%,=,$$$,85,],[2026,,,x,25\%,=,,,],[2027,,,x,25\%,=,,,],[2028,,,x,25\%,=,,,],[$Total deferred tax amount,,,,,,$$,8\mathrm{.}5,$Deferred tax liability$],[$Income taxable in current year,$$,1580,x,25\%,=,$$$,395,$Income tax payable$]]$

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