Question & Answer: Arnold Industries has pretax accounting income of $28 million for the year ended Dec…..

Arnold Industries has pretax accounting income of $28 million for the year ended December 31, 2016. The tax rate is 30%. The only difference between accounting income and taxable income relates to an operating lease in which Arnold is the lessee. The inception of the lease was December 28, 2016. An $8 million advance rent payment at the inception of the lease is tax-deductible in 2016 but, for financial reporting purposes, represents prepaid rent expense to be recognized equally over the four-year lease term.

Don't use plagiarized sources. Get Your Custom Essay on

GET AN ESSAY WRITTEN FOR YOU FROM AS LOW AS $13/PAGE

Order Essay

Required:

Complete the following table given below and prepare the appropriate journal entry to record Arnold’s income taxes for 2016. (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).)

Prepare the appropriate journal entry to record Arnold’s income taxes for 2017. Pretax accounting income was $43 million for the year ended December 31, 2017. (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).)

Assume a new tax law is enacted in 2017 that causes the tax rate to change from 30% to 20% beginning in 2018. Complete the following table given below and prepare the appropriate journal entry to record Arnold’s income taxes for 2017. (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).)

Expert Answer

Question & Answer: Arnold Industries has pretax accounting income of $28 million for the year ended Dec..... 1

Still stressed from student homework?

Get quality assistance from academic writers!

Order now