You are the new accounting manager at the Barry Transport Company. Your CFO has asked you to provide input on the company's income tax position based on the following: Pretax accounting income was $41 million and taxable income was $8 million for the year ended December 31.2016. The difference was doe to three items: Tax deprecation exceeds book depreciation by $30 million in 2016 for the business complex acquired that year. This amount is scheduled to be $60 million in 2017 and to reverse as ($50 million) and ($40 million) in 2018, and 2019, respectively. Insurance of $9 million was paid in 2016 for 2017 coverage. A $6 m on loss contingency was accrued in 2016, to be paid m 2018. No temporary differences existed at the beginning of 2016. The tax rate is 40%. Required: Determine the amounts necessary to record income taxes for 2016 and prepare the appropriate journal entry. (If no entry is required for a transaction/event, select "No journal entry required" In the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5, 500,000 should be entered as 5.5).) How should the deferred tax amounts be classified in a classified balance sheet? (Enter your answers in millions rounded to 1 decimal place (i.e., 5, 500,000 should be entered as 5.5).) Assume the enacted federal income tax law specifies that the tax rate will change from 40% to 35% in 2018. When scheduling the reversal of the depreciation difference, you were uncertain as to how to deal with the fact that the difference will continue to originate in 2017 before reversing the next two years. Upon consulting PricewaterhouseCoopers' Comperio database, you found: 441 Depreciable and amortizable assets Only the reversals of the temporary difference at the balance sheet date would be scheduled. Future originations are not considered in determining the reversal pattern of temporary differences for depreciable assets. FAS 109 [FASB ASC 740-Income Taxes) is silent as to how the balance sheet dote temporary differences are doomed to reverse, but the FIFO pattern is intended. You interpret that to mean that, when future taxable amounts are being scheduled, and a portion of a temporary difference has yet to originate, only the reversals of the temporary difference at the balance sheet date can be scheduled and multiplied by the tax rate that will be in effect when the difference reverses. Future originations (like the depreciation difference the second year) are not considered when determining the timing of the reversal. For the existing temporary difference, it is assumed that the difference will reverse the first year the difference begins reversing. Determine he amounts necessary to record income taxes for 2016 and prepare the appropriate journal entry. (If no entry is required for a
