Problem 16-8 Multiple differences, taxable income given, two years, balance sheet classification, change in tax rate [LO16-4, 16-6,16-8) Arndt, Inc., reported the following for 2013 and 2014 (S in millions) 2014 2013 $980 Revenues $1,015 Expenses 778 818 Pretax accounting income (income statement) Taxable income (tax return) $202S 197 $200 S 230 Tax rate: 40% a. Expenses each year include $40 million from a two-year casualty insurance policy purchased in 2013 for b. Expenses include b3 million insurance premiums each year for life insurance on key executives $80 million. The cost is tax deductible in 2013 c. Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2013 and 2014 were $33 million and $55 million, respectively. Subscriptions included in 2013 and 2014 financial reporting revenues were $25 million ($10 million collected in 2012 but not earned until 2013) and $33 mllion, respectively. Hint: View this as two temporary differences-one reversing in 2013; one originating in 2013 d. 2013 expenses included a $32 million unrealized loss from reducing investments (classified as trading e. During 2012, accounting income included an estimated loss of $5 million from having accrued a loss f. At January 1, 2013, Arndt had a deferred tax asset of $6 million and no deferred tax liability Required securities) to fair value. The investments were sold in 2014 contingency. The loss was paid in 2013 at which time it is tax deductible 1. Which of the five differences described are temporary and which are permanent differences? Difference Life insurance premiums Casualty insurance expense Unrealized loss Subscriptions received Loss contingency