Problem 16–8 (continued)
Journal entry at the end of 2018
Income tax expense (to balance) 52
* Temporary difference for subscriptions:
2017 2018 2019
Earned in current yr. (reported on income statement) $25 $33
Requirement 3
Problem 16–8 (continued)
Requirement 4
($ in millions)
Current Future Future
Year Taxable Deductible
2019 Amounts Amounts
[2020] [2020]
Pretax accounting income 183
Permanent difference:
Life insurance premiums 2
Temporary differences:
0(20)
Deferred Tax Asset Deferred Tax Liability
Deferred tax Deferred tax
liability asset
Ending balances (balances currently needed) $ 0 $ 8
Problem 16–8 (continued)
Journal entry at the end of 2019
Income tax expense (to balance) 74
* Temporary difference for subscriptions: 2017 2018 2019
Earned in current yr. (reported on income statement) $25 $33
Requirement 5
Problem 16–8 (continued)
Requirement 6
($ in millions)
Current Future Future
Year Taxable Deductible
2019 Amounts Amounts
[2020] [2020]
Pretax accounting income 183
Permanent difference:
Life insurance premiums 2
Temporary differences:
Taxable income (income tax return) 200 ___
0(20)
Deferred Tax Asset Deferred Tax Liability
Deferred tax Deferred tax
liability asset
Ending balances (balances currently needed) $ 0 $ 7
Problem 16–8 (concluded)
Journal entry at the end of 2019
* Temporary difference for subscriptions: 2017 2018 2019
Problem 16–9
Requirement 1
($ in millions)
Future Future
Temporary Differences Taxable Deductible
Amounts Amounts
Net accounts receivable $ (2)
Prepaid insurance $ 20
Prepaid advertising 6
Buildings and equipment (net) 80
Requirement 2
Deferred Tax Asset Deferred Tax Liability
Deferred tax Deferred tax
liability asset
Requirement 3
Taxable income times tax rate equals income tax payable
Problem 16–9 (concluded)
Requirement 4
Problem 16–10
Requirement 1
($ in millions)
Current Future
Prior Years Year Deductible
2016 2017 2018 Amounts
[total]
Accounting loss (135)
Permanent difference:
Fine paid 5
Temporary differences:
Enacted tax rate 40% 40% 40% 40%
Deferred tax asset (10)
Deferred Tax Asset
Deferred Tax Asset:
Journal entry at the end of 2018
Receivable—Income tax refund ($30 + 12) 42
Problem 16–10 (concluded)
Requirement 2
($ in millions)
Operating loss before income taxes $(135)
Income tax benefit:
Requirement 3
($ in millions)
Current Future
Year Deductible
2019 Amounts
Pretax accounting income 60
Temporary differences:
Deferred tax asset 0
Deferred Tax Asset
Deferred Tax Asset:
Journal entry at the end of 2019