Required information Problem 16-8 (Algo) Multiple differences; taxable income given; two years; balance sheet classification; change in tax rate (LO16-1, 16-2, 16-3, 16-5, 16-6, 16-8] [The following information applies to the questions displayed below.] Arndt, Inc. reported the following for 2021 and 2022 ($ in millions): Revenues Expenses Pretax accounting income (income statement) Taxable income (tax return) Tax rate: 25% 2021 $ 936 792 $ 144 $ 108 2022 $1,028 848 180 $ 214 a. Expenses each year include $54 million from a two-year casualty insurance policy purchased in 2021 for $108 million. The cost is tax deductible in 2021. b. Expenses include $2 million insurance premiums each year for life insurance on key executives. c. Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2021 and 2022 were $55 million and $71 million, respectively. Subscriptions included in 2021 and 2022 financial reporting revenues were $49 million ($34 million collected in 2020 but not recognized as revenue until 2021) and $55 million, respectively. Hint. View this as two temporary differences-one reversing in 2021; one originating in 2021. d. 2021 expenses included a $38 million unrealized loss from reducing investments (classified as trading securities) to fair value. The investments were sold and the loss realized in 2022. e. During 2020, accounting income included an estimated loss of $28 million from having accrued a loss contingency. The loss was paid in 2021, at which time it is tax deductible. f. At January 1, 2021, Arndt had a deferred tax asset of $4 million and no deferred tax liability. Problem 16-8 Part 2 2. Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. Using the schedu prepare the necessary journal entry to record income taxes for 2021. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) ($ in millions) Current Year 2021 Future Taxable Amounts [2022] Future Deductible Amounts [2022] Pretax accounting income Permanent difference: Life insurance premiums Temporary differences: Casualty insurance expense Subscriptions2020 Subscriptions2021 Unrealized loss Loss contingency Taxable income $ 0.0 $ 0.0 Enacted tax rate (%) Tax payable currently Deferred tax liability Deferred tax asset Problem 16-8 Part 3 3. Compute the deferred tax amounts that should be reported on the 2021 balance sheet. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) Deferred tax amounts ($ in millions) Classification Amount 4. Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. Using the schedule, prepare the necessary journal entry to record income taxes for 2022. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) Required 1 Required 2 Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) Current Future Taxable Year 2022 Amounts [2023] Future Deductible Amounts [2023] ($ in millions) Pretax accounting income Permanent difference: Life insurance premiums Temporary differences: Casualty insurance (reversing) Subscriptions2021 Subscriptions2022 Unrealized loss (reversing) Taxable income income tax return) 0.0 0.0 Enacted tax rate (%) Tax payable currently Deferred tax liability Deferred tax asset View transaction list Journal entry worksheet 1 > Record 2022 income taxes. Note: Enter debits before credits. General Journal Debit Credit Transaction 1 Record entry Clear entry View general journal