Part $1$

Invest Arkansas $($IA$)$ is a major purchaser of Akansas State and Municipal Government bonds and Nvidia bonds.

In $2024.$ IA classified all securities as trading securities and reports $$10$ million in pre$-$tax income on the financial statements.

That $$10$ million in pre$-$tax income over $2024$ is comprised of:

$$3$ million in interest from the State of Arkansas

$$1$ million in interest from Pope County.

$$4$ million in realized gains from sale of Nvidia bonds

$$2$ million unrealized gains from Nvidia bonds.

Assuming year end date of Dec $31$st$,2024,$ record IA's:

a$)$ Financial statement net income $($i$.$e$.,$post$-$tax$)$ assuming a $25\%$ federal tax rate $($ignore state taxes$)$

b$)$ IA's Deferred Tax Liabilities or Assets as of Dec $31$st$,2024.$

c$)$ Taxable Income federally $[$as on the tax return$]$

d$)$ Tax paid$/$payable and income tax expense on financial statements

e$)$ Which of the above DTA$/$DTL$\text{'}$s are permanent, and which are temporary?

Part $2$

Apple lnc$.$ sells Apple Care products. which effectively serve as warranties on their popular iPhones. On Jan $1$st $2024.$ Apple Inc. received cash of $$2$ billion in Apple Care premiums, but to their surprise. not a single iPhone wass called in for repair or replacement in $2024,$ which shocked many analysts as historically, they would expect to pay out $60\%$ of the premiums received in replacement costs, which are normally accrued evenly through the contract period.

Over $2025,$ however, their claims came in as expected and they paid customers cash in lieu of their broken phones.$($assume customers received the cash value of their phones, which came to $60\%$ of premiums for simplicity$)$ These Apple Care contracts last two years between Jan $1$st$,2024$ to Dec $31$ st$,2025.$

Assuming year end date of Dec $31$st$,2024,$ record Apple's:

a$]$ Financial statement net income $($i$.$e$.,$ post$-$tax$)$ assuming a $25\%$ federal tax rate $($ignore state taxes$)$

b$)$ Apple's Deferred Tax Liabilities or Assets as of Dec $31$st$,2024.$

c$)$ Taxable income federally $($as on the tax return$)$

d$)$ Tax paid$/$payable and income tax expense on financial statements

e$)$ Which of the above DTA$/$DTL$\text{'}$s are permanent, and which are temporary?