sent 2088) ray xa operates en Coma acetate ee Yeon, income enti CHAPTER 21 ACCOUNTING FOR INCOME Tax. Basic problems comet wae ncomein hen eee oo 10 is ofthe P900,000 difference asst dimee and 0.00 wn 0 a elated to a CUTTER asset, The ease iby erence rand fut years is 30%. estate forthe asthe eurrent tax expense? Problem 21-1 (AA) ee i ino Company repre pe naa incom 96.20 9, © G00 hecuren ea Ineldod in ober income was P200,000 of ont Bait [meet evenve fom goverament bonds held bythe entity. gs ea0%000 1, Whats the total income tax expe ‘Teincome statement inluded depreciation expense of St ery ume enenge to beep inte ‘machine withcost of P3,000,000. The income tax retum 00.00 as depreciton onthe machine. The enacted an forthe cutentyear and future years. ‘Whatistheeurrent tax expense forthe curent year? 100 al ais, Rhee saluion 21-2 6. 1,800,000 17770000 Question 1 Answer . 1830,000 Curent tax expense (50% x 5,100,000) sssn00 Solution 21-1 Answer € ‘Question 2 Answer © Financia income somo Ip Assuting or financial income 600000 Interest revene on government bonds Cron FP Pemanent diterence «30000 “Tx deprevaton in excess of nancial depreciation Accounting or Financial income subject tot. 0.00 ease ‘oul incometax expense (GOS 500000) _,65n000 fanable income ‘Te otal income tax expenses based on accountng or nancial Incomesubject tax. ‘asymp financial income subjectto tax, permanent ferences Current tax expense (30%x5,900,000) ‘Thecurenttax expense js based on taxable income, 288 me22M comp pp nse eco le SST omen ame te 1,200,000 of estimated warranty ttf the ‘ofan officer, PI Premiang noes 590,000 oie nsranes Pony me ax was previously pak ring the yearang emis 30%. he ining + atthe income tax payable at yearend? Solution 21-3 Question I Answer d Finacial income asian Nontaxable fe insurance proceeds cae semietbe fe insurance premium foran officer 200m Financial income subject to tx Fanon Estimated warranty expense ‘Taxable income 1200000 5.500000 Income tx payable (30% x 5,500,000) 1.650000 “The income tax payable is actually the current tax expense sit there isno income tax payment during the year Question 2 Answer b ‘Total tax expense (30% x 4,300,000) 290 ante 21-4 (PHILCPA Adapted vag Compa TPO! pretax in aig arent rhe cue ear ome of PI.09, Question 2 Answer d Total tax expense (30% x 1,090,000) awit ite Ten es voy Se ‘Income x7 isthe current, basal Frat pranci 360,000 ve ald 28 ae 5 as eas cesae 2 sows ee a Meee ium on officers” life ins a Premi fficers' life insurance ~ nondeductible 100 one ry difference $0,000) sr as (ai OE pein ren pape EAcompany erate ee tebe tg, waco, csermcpepmmincmenet “ty eect ie, emirate ae ma ay, =o Sotion 21-5 Question I Answer © Question 2 Answer Pretax anil income Nosusable gin Finacial income subject tot Excess tax depreciation “aaale income ‘Carentaxexpease (30% x 400,000) Estimated ax payment Cent iaility ‘Total income tax expense (30% x 450,000) 292 \e Ge REEF ones htMCPA Aa) r ips aa ne ceteemet a. neeee ® items are treated wo ety rn pak Te tere eine = ition expense 1254 renee i Pets gely soe roe a 1, Whatamount sould be reported as carreatpertnofiasone 11,000 106,500 ©, 138,000, 114,000, ‘Whats the total tax expense? ‘120,000 124,500 ©. 115/500 117/00 Solution 21-6 Question! Answer a Question 2 Anower Pretax accounting income Paymentf penalty -nondedutbe Accouatingincome subject ot Royalty income in excess of table amour Excess tx depreciation “Taaable income Corrent ax expense (30% 370000) ‘Total tax expense (30% x 415,000) 23problem 21-7(PHILCEA ASAP) Fr aes Evtasing Tan Pe Aen ering 0 00 beer seo ng emi ees foie teraion esr, vrrome on goverament bonds ‘ sete incor po tan seu i eXCESS 0,009 Pe reiation pe bok 1.300, rant epee eral basis om var warranty payment : Acta cn ntiment sale reported FOF 0060 nom qcean of name eeo2Ad PE BOCK 200009 Income ax ee ‘What iste current tnx liability at year-end? 2. 2,700,000 b. 2250,000 2,490,000 4. 2:130,000 Solution 21-7 Answer ® Accounting income Sipon000 Interest income C700'000) rt saan in excess af deprecation per book (1,300,000) Warranty expense per book ‘noon Actual warranty payment 300,000) Income from installment sale reported fr tax but int recognized per book 20,000 Taxable income * 7,500,000 Current tax ibility (80% x 7,500,000) 2asqo00 is equal to the eurrent tax expense ring the year ‘The current tax liabi ‘because there is no income tax payment di 294 problem 21-8TFRS) tte or tax purposes, the depreciation rates 25% the es RO ed Pre 2 is FH. 00 and nent seed PL "Whats the current tax ibility at year-end? 1,200,000, “h, 1290,000 1368,500 -1:150,000 21-8 Answer b sing proit n~ nondeductible (800,000 - 700,000) “(1,200,000 ~ 1,000,000) ‘Taxable income Carrent tax Wabitity Carrying amount Tax depreciation rate ‘Tox depreciation Accounting depreciation Excess tax depreciation preston exces of contig Spin eave pid in excess of emoun econ revenue in excess of rent received (60% 4,340,000) 1,600 00020) ws mrt Company made can ich inch oe Profit year ih le eA. oy ‘neome snd ‘900.010 ‘te "a9 1200000 30% anna eave 100. The etya eal 219 AICPAAN yee ore cn robe 21-9(SCPA ROT come sneer Cute ye conc etme ndvance $80.00 Rete ig Soca x PUTOSES 2.0%) Er pe gaa ts jon for income tx for thee Tati eurent revs en, roo ed tae 5 Bie 1 rmnner watery? Pm 2 Be St 5 ism eae fein Bares oom einmaer on sonit-pemaen iy og eos ptt nel Te echt inadvmce ssno0n ee er) pees am crea prvi for same tr (50,000 30%) 808 Question 2 Answer € ‘otal wx expense (30% x 700,000) 296 ja 2110(EILCPA Aap) mcompiny is dciermining the aout of sce Corte oie caesar ne mt ingete ‘ceouting ie trom the income tax return Thee to able iene of P4,000,000 on which a tax liability a Sood see Scab eos ry vide the fllowing tem at may co an scounng aeons om he pret, ‘he bereauied to see amount of table ceclersted depreciation fr income tx purpose $9,000 Straight line financial depreciation os tes peso theses «Goodwill impairment loss of 300,000 was ettinine copie an «+ taverest income on treasury bills was not ialuded athe tx tlm Daring the yeu POD 000 as tesa eee invesunents. ‘Whats the pretax accounting income forthe cares yea? 4,100,000 ' 4 200,000 & 4300,000 4. 4400,000 Solution 21-10 Answer d ‘Tasble income Excess tx depreciation (500,00 400,000) ‘Goodwill impairment loss Tnterest income on treasury bill Pretax accountng income Thepretax accountingincome isthe accounting income per ook nd ‘notte accounting income subject ots, The accounting income subject to taxis equal oP, 000000 pus 100,000 or P4 100,000, The permanent iferencesareexchded. atprablem 21-11 0AA) 71-12 (AICPA Adapted) pestoing etl OTE ng ee ex co : ein ec ee intel Zeeencinoe mona = % : Sere my iene fey fice ay pe ere crak eng 8 Deferred om ereen mane onde mae Netineome : 28 eee oerrepals to ‘Teeny edhe sigh ie mtn of Pa ffm sud dt eoface in allowance fr bad debts 90 porting purposes and occa ax purposes nce wallowance for bad des ‘ad eee cb nb rind omy aoardaetinigncnineseSTTHOLNSPL gy, fp Mactan br = ve imei bree bookie ina fis Wisi acom rte Neate Se axpecmion Thee sm . “yt anon astute fr Jpresiaio MEENTEM yy 450.009 anotjoe? Peis «1200010 212 Answers 125000 : ©. 1,500,000 “prac acouingincme foam Pees enace ram &Vamo00 nem “a Serena ae ‘ee vara Sipe 0500-2000) ‘ton Solution 21-11 Answer d Depreciation per book soann fp Rettecsved in advance erate temporary iference (20,000 /30%) a0 FP tasabe income Depreciation for tax purposes 28008 FP neznningatowance for ba debs Bad debt expense Teal ‘Witeoft (squeeze) Ending allowance for bad debts 299 298, aces of bad debt expense over write (60000-20000), 000CHAPTER 22 DEFERRED TAXASSETANDLIABIL py, ‘problem 22-1 (AICPAAGapt=S) ‘on Jae 30,2017, Ank Company preps P1000 000 on race poi. The premium payment ya 2 godt Teatas cn Thea bsisinoe staterent wl ep PS “expense in 2017 and 2018, The income tx ate ‘samo (On December 31, 2017, what amount should be report ‘deferred ax liability? a 300,000 150,000 200,000 rie 0, ‘Solution 22-1 Answer Defer x ibility (500,000 30%) ‘Since the mpact ofthe temporary diference isa higher accountng {income tan axable income, there is a deferred tax lisbliy. ‘Actually, a deferred tax li temporary difference. ity arises from a future taxable The prepaid insurance of P500,000 isa future taxable amout and therefore wil result toa deferred tax lability 300 230 die 2, rao 90 comp “PHfowevgr inthe nce Sac pega me seins tempor ile jester 37% ee erg ‘should be added tothe deferred ax lb t sia eee 94 snd 450,000 so season 222 wer sedegeinion SEprciaion eeetale set on indeereebliy OK 50000) Sow potkan 22-3(AICPAAP) va ecco eating free ma a ma ast ihe begaml bs exes 7 ee unset Hemet ‘eof had no oerpemanent or tempory illewnss ‘What amount of deferred tax asset should be report December 31,2017 1.200000 #3001000 © 600,000 ‘ 0 Salton 22-3 Answer & Defered tax asset (2,00,000830%) renee isa higher tle Sioce the impact ofthe temporal income than accounting income, es Actually, a deferred tax asset rises fom #04 Yemporary difference. cere x deductible aoton officers RANT 0a) 00g eat 201 fr ne ey Sea eer ta eve ha a abs ere goes nc if P 2,000,000. et p22 S(AICPA ADE!) se Mten toilet ae ec atitcen tea e Carmingamownt Tat bat Ditrene non ay aa rand FED 2018 a va, gi mom Dee se ogiatarar panes a, Pliny 15am ease re asonenbsseSSDHOOS Teagan ; 8 i i Pisoth 2017 nd 20 Ms, petal amount offture taxable diference? 1 gat amount shouldbe reported as deferred tay wai Beeember 31,2017? Macey 205000 a 630,000 i 155008 b, 540,000 80000 600,000 $0,000 ny 22-5 Answer € 2, Whatamount should be reported s deferred tax tain, en Deventber 31,2017? itty a 120,000 irovcarrying amount of naseisigherthan theta tse the U escocsa futur taxable amount nd hrf header ‘alii 90,000, § oto ‘oust diferencein the equipment of P8000 sa fuuretaable sunt. Solution 22-4 ‘pediference ofP7S,000 sa permanent diference esas tbe ‘fers insurance premium is nondedutible Therefore, this tiference as no deferred tax consequence. fhe carrying amount of ail is higherthan the tabs the Aifernce is future deductible amount and therefore theres 8 deferred tax asset. ‘Thus the difference of PS0,000in warranty aii is tare deductible amount. Question 1 Answer c Deferred tax asset (30%x2,000,000) Only the estimated litigation loss will result toa deferredtaxast because isa future deductible amount. Question 2 Answer ¢ Deferred tax ibiliey (30% x 200,000) ‘The pres insurance of P200,000 wil cesult toa defelo® Ubi beau rs futue table amount am a0probes 260FRS) en 22 RS) -carcextable wich hat acay — Gem Company has GES T5017. The related interen yey company nas 8 Eon which hada eh interest Cerppn at year-end “Trew writen down acre ct ea Fwo,000en Si Teeny bas 000 00 ons 201 crecervette 300.000 te sips bon on December "Ahh oy ate was P9000. Theta PS have a carrying amOeT' ognized in profit or loss (20 Ssefeigetconetomtotmacgg SPOS ensuchiirttenstneea f2017 recs ttl tase oie eeiabl and ae re, sn.00 asset da everber 31,201 tah J & Fao a $,000,000 770.000 asset & go. p00 ibility oe sonaion 22-8 wer B ve tazable amount 1,800,000 90,000) “saaion 2-6 Answer & aa ng amount of itrest receivables Plo, The caring am tthe tax ase Is 20 because th sur medonacash basis mse hea ree yingamount of the trade receivables is PS,000{ Tecan 000,000 because the related revenue cope tax purposes inthe same Year Problem 22-7 (IFRS) Cn January 1,2017, North Company has spent P600,000indeveoiag ercetproguc This cost meets the definition of enintangible ase Te 200% Prjlows tis cost to be deducted fo tax purposes when paid. eee elit bas recognized this amount as expense in 2017 feria, sa ecember 31, 2017, the intangible asset is dened terre iatity 00% 900.00) problem 22-9 RS) Fi oak Carpe a it as oT A Se sce ‘Teceryingamount of the property WwasP8,000000ante eave Tas P1000, 000 However, he tase ofthe ore was a P6 000,000. Te income taxa is 30% ‘atisthe deferred tax ase orliabilty st year-end? 1,200,000 asset purposes, ‘impaired by PS0,000. '. 17200,000 lability ‘What isthe tax base forthe intangible asset on December 31,2017! $600,000 anes, hapten 60,000 ity & ss0.000 Solution 22-9 Answer b g;, 650.000 Feretazabieamennt rocunoun coun) £0000 Solution 22-7 Answer d Deferred tax abity (90% » 4000009) ae The camying amount of the intangible asset is 600,000 kes te impairment loss of P50,000 or. "P550,000 but the tax base is oe the current year fr tax PUTO es ‘because the total amount i 304carceaadanted) eration 28 1.2017. Fag Tower Company PEA swertue from, fi eng ame ols pated come txt cheat Tepe gu ‘ine problem 22 HHoweverintit liner insane pears pfitan seins SIESUNIETERC Maho accra method — Installment method 017 3200.00 1.200.900 joie 5200000 280,000, “Te income tax rate is 30%. There ar© NO other tem permanent difrenes. Ora (On December 31, 2018, what amount should be rep fered tax aset or ibility? ea 000 asset 11320,000 fai "720,000 asset 720,000 labiliy Soltion 22-10 Answer 6 ‘Accrual method financial or accounting income Installment method -txable income Faure taxable amount Deferred tax tability, December 31, 2018 (440,000 30%) 306 jeos 22-11 (ATCPA Adapted) rt peepee follow loving rem Coble income Fer 2018, Ma x crcl OE Fest eneoptalicd ane Fe ecg fet ae re (29000 st i : pnt en ay 2018. * i deena! December 31, 20187 2, 130,000 90,000 60,000 te 230. Soltion 22-1 Answer a efeeed ax Habiley— 12/30/2018 (500.000 x 30%) 100 ‘The permanent difference bas no deferred tnx consequence.role 22-1204) 2 ong euler, oe et Pa. amiss sropemne 1207 inten, ec 2 at . vats the deferred tax expense for 20172 aig 1 $00,000 900,000, 400,000, 4 100,000 Solution 22-12 Answer b aerease in deferred a ibility (1,500,000 ~ 1,000,000) Decrease in deferred tox asset (400,000 ~ 0) Deferred tax expense ‘Thedefired nx expense isthe net effet ofthe changesin defen ‘ax ability and deferred tax asset. Journal entries on December 31,2017 1. Torecordthe increase in deferred tax ibility Income tax expense 500,000 Deferred ax liability saagon ‘Torecord the decrease in deferred tax asset Income tax expense 400,000 200.000 Deferred tax asset 308 conor bE OTN 2017 ic _ pen 2 13(AICPA Adapted) ree eh xp of np om ie ale of P1,000 0. is dn ib oe et ep adit ibe ain he 0m COE Wh eae sie et soon 2-13 Anower a debts xpenscis fuse deduebetenperay atta cpe tn fatc s “peteed ts aset 20% x 400600) Mpenex Late fit fom installment sales a fue tasaleempony and therefore willresultioadeferedtaxlshiiyy 9000 came tnx expense 300,000 Deferred tax liability (30% x 1,000,000) 3e0.o00 Defered tax expense 3oo.H0 Income tax benefit 200) 100 [Net deferred tax expense Needless to say, if the income tax benefits mor thn the ered laxexpense, the difference isa met deferred tax benetit, 309ate pay PO, gyn 216 (AICPA Ate en 0 a ee cocina ee ee ta Reagan etna ae ines eee actions) Sahota, Sprite ante ested ter faureyeny ROE (75.000) None ose peancen existed bebe segametansartermn lee) Catron” peepee See samt : ‘ rye ti PLOODAPTHESTETEALN ah ‘Tax return Accounting record Beet or fated beg netelccmmeneme uae on December 3, 2017, hal amount SBOUIA be repo, pees se meurrent . ~ Paw £2 8B Sato 2-1 Anverd Oak ‘later iy alc noncarent iggy fp > Nittient dered sexe prolon 2215 (AICPA Adapted) Bae Soa iecepmrotaarilicestt? rio, and 3017, Temporary difterences ofP100,000 resulted intaxable inane ff Solution 22-16 Question 1 Answera Question? Answer Fa enor mente pL sicon 7216 Quon mon Coen en dooce p_ meokeouting in om differences: The income tax rate is 30%. Accounting income subject to tax 5,950,000, What amount should be reportedas deferred tax expense for. JB Uncollectibl acount (300,000 200,00) 10000 Depreciation (800,000 ~ 500,000) (300900) ‘extinct a. 12,000 & 21/000 ome Current tax expense(3%6 5750900) Solution 22-15 Answer ¢ Peed Sx ee (28% x 300,000) red tax bene 10000 Decrease in deferred tax asset sot eae Ce. ria) PP Net deferred tax expense The future enacted tax rate of 25% is use in determining defer te ‘seetand lability, Increase n deferred tax ibility (30% x 70,000) Deferred tax expense 3 310a ‘Problem 22-17 (rHULcrA. Adapted) Ps 4 0 enter t or a cemetery Yam that will VEE NY pd P1,200,000 in 2020. The enait ina? ~ Eee em, _ = = = Se eeenitttomie, | SRT ne Ee = recseerr ate, I een ah 8m : a eect et . fend waranty cos, the current tax expense for2017? 1 wes goog ‘ie when pa Feet . © 1200000 pane to or atoning pes eat & 200,000 ‘eas reeivable fr accounting purposes bt sack det a the net deferred tax expense for20177 nestle aoe ate Tovtxrmes30% 2 Whats the met Spt amount should be reported as deferred ta aby? a 1930,000 "20.000 1b. 1,200,000 + 156,000 © "aa00 a0 450,000 36,000 pn ‘sion 22-18 Anower a “Cait noon ice Question | Answer € a mt Fr isle amount enable amen I etre tax uabty. 0% 04 ‘(1,100,000 + 1,200,000 + 1,200,000) G,s00.000) Bcc pense) Fe ee moa imme Aum _— Table icoe Gary amoust TERR 0 Trois fo wray: _ event ta expense x Curying a Pr Carrnt tax expen (60% 4,000,000) Sabet SSD am recived inadvnce: erin daar Ercan va taka Incestin defen inbilty 30% x3,$00,000) 8002 Ince in defered ix aset™ 30361500000) (40) JP Toa future deduce amou “anon PP deterred tax asset 60068520.) [Net deferred tax expense 312 323Meraefatlowng A IMEAMONN a canary sted etna ui "2100 "in both countries, the entity has the ey nega) ease vet ehtoticte BS cn sed trpntang a tom OMe les erty nd for plant ang Teva trenrepe oo rapeetvey any Pisin Avett we vision fr inventory obso oc 0 Tae ey Crepes, ey fe iy sen Soa rane rade receivable ose bly ‘a0 Maia be aninpieentossesnstdeeedateotP ay ar Scone [oR a seg motte aowedinthecarey th tax pryoses, The tax ratis 30% ‘erent shoud be recognizes deferred tax expengey 2 tatoote & roto et &onn00 Solon 2.9 dnwerd POR og ncut :gom000 Tax 1,000,000 rae count 500 000 ‘axbase 4,000,000, Foe ble oun tet aa Grping amount 2oone0 “ae 2208 Cee ence 3m lity (0% x 4,000,000) Deferred tax asset” (30% 3000,000) Net deferred tax expense au soninl tcetly reset defereiassyerend? Deferred ta babii 500.000 1,000,000 600000 300000 22-20 Answer d Seng ax set Singapore cS a ably ~Sinspoe maa 4.00050 fered 5 Singapore rr) 7 uae Asoueer a ibility — Malaysia oun 200000 12, paragraph 74 provides thn ety allot deere “stand defer taxable 4 The defered tx asset ond defer ta lity itn iso taxes Tevied by the same taxing autor. 1. Theenttyhasalegaenorceablright stock setaginsta cent te iii.oon ses maxesseare O07 cco 00,90) 2 Answer € "cacti (1000 veil i) vend es see pesto 3 Awe income Men aount Tcsivabe setledin 201 ality sy | Sore a cere osan, mare Cm ; jen PR another approach eae a ‘altacexpensepa Adapted) problem 252(A1C8 : sneer p, Tce cee totter vet nancial COE Maan Lomniince rt raewemeamom (0 Bp pekeced saint ¢ 2) FOr atmy e284 pies 0 raxable income L099 ea ts . ey ne exoess tx depreciation will result a defeed 1. trie income tox i8 30%, what aMOUN SHOW be rep ‘iSggeitisa four taxable amount ta lability Te eeexpense-eurent portion in he income soe", a 44500 mat 4 pened (20n90n.20%0 ae 480,000 accrual a gos acral Wil ated Pa er erBicanoan terete ueston 4 Anewerb prt nancial income 4. 390,000 amount should be reported as deferred tay tg bs liability ‘Nontaxable interes received yearend? a 39000 B 43000 e750 aac cone obec nt & ° ‘Total B0% 4. What amount should be reported as deferred tax asset a oe yearend? Aawtter approach 30000 insesin defer tx bili oe & 75000 ines in dfered tox se az © 45000 Detar ex expense a Cot tx expense nan Deere x expense 4. 70,000 4. Whetamount should be reported as total tax expense forthefis, year? a. 480,000 b. 465,000 ©. 420,000 d. 435,000 Total tax expense 319 318problem 230084) oi uaabl income of PR 00, siabilizer COPA TS year of operations. 00 i, * soir oe eA operat "he on anor? ra ne ng nt Aen get 00% 120000 al se po ‘x0 i for product ably inexcess of ma sl aca iis fare depreciation "eget ewes se, am in excess Tecra rinencess of 000 cn fe et at tin excess of 12004, ion rae gees HOME ci tn ince ony, fP BeSinen tein ae 2, Pp acre table amount 20000 Tr picts 5 od 24000 M eatntaty OPO 360,000 ‘fiiste Lowe e780, vestion 3 Answer © é eas in dec x ibily nceose in deferred ta as 19900 wars te dfereed a ability tear? mane tax ante mo a 1,020,000 efe ‘per “30,000 © 2xoo00 uation 4 Answer a ee en a0 1 aie defer tespensefor be ise? otal ty os, a. 1380.00 Esa rete ne noticed intablecone 2200 20.000 peoutng income sbjet1 por © 660,000 wound 360,000 ‘Total tax expense (30% x 10,200,000) 360.00 “4. Whatisthe total tax expense forthe first year? Another approach, 2. 3,060,000 ‘Current tax expense (30% x 8,000,000) 2,400,000, 2,400,000 Core ree 7 wa 2,580,000 ‘Total tax expense 3,060,000 d. 2,220,000 poate _ 320 ajsthe current tax expense forthe current at re scours of Simple Company .* aa ont onDecente 2a purpose exp he Ge 00 000 Sor fats 5 380 same seeucenomnt Taba & 3400.000 cot Amn oa e300 comp ‘pmo 12000900. $3 tons Ear pence 20000 en eeeessi 7 het ine st of PF.00,09§ 207 gacomputer software product, ‘a 1200000 tothe devon * + Hoan csnarecostwasoproptnelcapialized and 21006 Pe nero eg orien, Pg. 1,500,000 foweve etal aroun was expensed 2017 fo py 4, wnat ate dfeed tx asetonDecenber 31,2017 ecqipmen vasaued on usr 12017 P290mq fp Soo iis years with residual vale, 300,000 ne 600,000 ef, -Theequipmentis depreciated using the stsight line for accu, of years’ cigitsmethod for tx purposesand sum ofa Toe “4, Whatis the deferred tax expense forthe caren yea?? tnanary 2017 he eat enent an agreement with eed lh cate benefits. The est of such plan F207, a. 2,100,000 2,000,00. ', 2,700,000 y «, 1,500,000 4 "600.000 “The amount of P2,000,000 was accrued as expense in 201 accounting poses. 5. What isthe total tax expense forthe cunt yest? However health care benefits are deductible for ax purposes a3 Hesapienriony 900,000 . 4,500,000 «. $10,000 The pret acouing income for 2017s P13,000,000-Theis* 1,500,000 {30% and there reno deferred taxes on January 1,2017 322 alcomputer stare 05 fupmest oul ena Deferred Question 3 Answer € Je temporary diference Deferred “reac inl foresee is ftre deta estion 4 Answer € Incense in deferred ta ibility Incense in deferred tx asset Deferred tax expense Question 5 Answer Total axenpense (0% x 13,000,000) Another approach Curent tx expense Deferred tax expense ‘otal tax expense 304 get — 121312017 (30% x 200,000) 6 33-5 PHILCEAASapted) po ny started to manuf in 2017, apie 201 macs - eee eat cg ne en Ca ‘sgmens are received fortx purpose” SM Zong) ett recognized gros poftofP6 ee ee tt ee pofteaced bem ey espe wea. 30000 a0 Fee . steed the copy machines fortwo years, War ‘een Egzodon he acral basis fr fail aout i * Sante re apense acrod in 2017 P2350, seat Mate aan comigmcn 2h? creed tan Zoey P3080 930 00 and 10,00 reps af = a ats wil be pai. : eae a jent was paid. The entity i the beneficiary. ee ema rari sree al Secure 7 2.1000 a, $70,000 (sony FFB $00,000 soup 4. 480,000 21. Whatisthe deferred tax ibility on December 3120177 1,800,000 Su ‘6 1,350,000 1300000 & 1320,00 24g [> 3. Whatisthetotaltax eens forte curets =? Jae 600,000 su 301000 = ©. 480/000 ao mssolution 25-5 Question Aner prc account ino Petanent eres Totrest income Insurance premi¥™? accounting income subieet iferenes TGs it sale npr ton salient ‘Warranty ability (2,000,000 30%) ty ibily (900,009 30%) Warranty Operating loss earyOVeT Deferred tax asset ‘Question 2 Answer b Deferred tax Hiabiity ($500,000 30%) Question 3 Answer € ‘Accounting income subject t0 1% Mulily by ‘otal tax expense Another approach increase in deferced 10x liability Increase in deferred t2x asset Deferred tax expense ‘Current ax expense Deferred tax expense ‘Total tax expense ‘The current tax expense is zero because there i loss. 326 rien 26(0AS 1) 1, 2014, Easy Com a (080080 tcequipmentis epee gece a om Benes en radar oOo, 509 1, 2017, after3 year, : i ont otis leer, Vang, penx szzuming income befor es ei is i 00 Te ct rae Sh 20 ee g defe in ee — (s005e 1 Fm the revaluation? mage 1201 ig =< a. 1200,000 a0 o.oo 4504 wae 0 Ph ’ Bey Watt cuenta expetfir career? 0.003 13s 3,000 138 eo a 33300,000 ving PP > Yate emma ee — = 73000 em a. 450.000 “4 Whatis the total tax expense fortbecurentyeat! 3,750,000 athe revaluation surplson Desenber 312017? i an oper aSolution 23-6 ity tax liability ~ December 31, 2945 Question! 4 cnt Rancen esx 7.00.09) = co ibility ~Samuary 12017 eauiprest som romeo fa: Bissiony Spagna fn : i 2 ~ $300,000 was - ee “5000.000 700.000 zeke so ae ae * soon an Soren a Be sao « renin eupls isa t8xable 2 pent 8s eXDEREE can usenet oon a : regan BS TENS Sa Sn te aoe a oe Xam, rea ay kn2 50000 se wera OO 48008 rot etn ane a OOO aay mss ea ‘ay Sacre depen ae pr 0.0008) om ae aes, Taxable income “Sea ae pject to tax ra 3 Answer eae tax expen 8,500,000130%) futon 3 Ano a sim cn Fan detion 5 drove eg 100 “en pita Sain nce mon cau Oeics hy 1.80 et canyneonmnt Deemer 312017 en ae eens, Se DE irmewcs naps Deer saon ase Sa miso F se 209.0 fata ie aioe aoe ae Bice = ‘ax base - December 31,2017 soo ae sao caryng amount ~ December 31,2017 saa Seats ‘in ‘Texable temporary difference 2m 328