Required information

Skip to question

$[$The following information applies to the questions displayed below.$]$

Arndt, Incorporated reported the following for $2024$ and $2025($$ in millions$)$:

$20242025$

Revenues $ $926$ $ $1,018$

Expenses $782838$

Pretax accounting income $($income statement$)$ $ $144$ $ $180$

Taxable income $($tax return$)$ $ $118$ $ $214$

Tax rate: $25\%$

Expenses each year include $$44$ million from a two$-$year casualty insurance policy purchased in $2024$ for $$88$ million. The cost is tax deductible in $2024.$

Expenses include $$2$ million insurance premiums each year for life insurance on key executives.

Arndt sells one$-$year subscriptions to a weekly journal. Subscription sales collected and taxable in $2024$ and $2025$ were $$45$ million and $$61$ million, respectively. Subscriptions included in $2024$ and $2025$ financial reporting revenues were $$39$ million $($$$22$ million collected in $2023$ but not recognized as revenue until $2024)$ and $$45$ million, respectively. Hint: View this as two temporary differences$$one reversing in $2024$; one originating in $2024.$

$2024$ 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 $2025.$

During $2023,$ accounting income included an estimated loss of $$18$ million from having accrued a loss contingency. The loss was paid in $2024,$ at which time it is tax deductible.

At January $1,2024,$ Arndt had a deferred tax asset of $$10$ million and no deferred tax liability.

$5.$ Compute the deferred tax amounts that should be reported on the $2025$ balance sheet.

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