9. Black Co., organized on January 2, 20x0, had pretax financial statement income c P500,000 and taxable income of P800,000 for the year ended December 31, 20×C The only temporary differences are accrued product warranty costs, which Blach expects to pay as follows: 20x1 P100,000 20x2 50,000 20x3 50,000 20x4 100,000 The enacted income tax rates are 25% for 20x0, 30% for 20x1 through 20x3, and 35% for 20x4. Black believes that future years' operations will produce profits. In its December 31, 20x0, balance sheet, what amount should Black report as deferred tax

9. Black Co., organized on January 2, 20x0, had pretax financial statement income c P500,000 and taxable income of P800,000 for the year ended December 31, 20×C The only temporary differences are accrued product warranty costs, which Blach expects to pay as follows: 20x1 P100,000 20x2 50,000 20x3 50,000 20x4 100,000 The enacted income tax rates are 25% for 20x0, 30% for 20x1 through 20x3, and 35% for 20x4. Black believes that future years' operations will produce profits. In its December 31, 20x0, balance sheet, what amount should Black report as deferred tax

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter3: Taxes On The Financial Statements

Section: Chapter Questions

Problem 4BCRQ

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39. Wright Co., organized on January 2, 2021, had pretax accounting income of $960,000 and taxable income of $3,120,000 for the year ended December 31, 2021. The only temporary difference is accrued product warranty costs which are expected to be paid as follows: 2022 $720,000 2023 360,000 2024 360,000 2025 720,000 The enacted income tax rates are 25% for 2021, 20% for 2022 through 2024, and 15% for 2025. If Wright expects taxable income in future years, the deferred tax asset in Wright's December 31, 2021 balance sheet should be a. $288,000. b. $360,000. c. $396,000. d. $540,000.
Black Co., organized on January 2, 2004, had pretax financial statement income of P500,000 and taxable income of P800,000 for the year ended December 31, 2004. The only temporary differences are accrued product warranty costs, which Black expects to pay as follows: P 100,000 P 50,000 P 50,000 P 100,000 2005 2006 2007 2008 The enacted income tax rates are 25% for 2004, 30% for 2005 through 2007, and 35% for 2008. Black believes that future years' operations will produce profits. 20) In its December 31, 2004 balance sheet, what amount should Black report as deferred tax asset? a. P50,000 b. P75,000 C. P90,000 d. 95,000
11. Ace Company had a pretax accounting income of P5,000,000 for its first year of operations. The following differences are noted between accounting income and taxable income: 1) Nondeductible expenses - 200,000; 2) Nontaxable revenue - 500,000; 3) Gross income on installment sales reported in accounting income but not in taxable income - 1,000,000; 4) Provision for doubtful accounts - 100,000; and 5) Income tax rate - 30%. COMPUTE THE FOLLOWING: 1. Accounting income subject to tax; 2) Taxable income; 3) Total income tax expense; and 4) Current tax expense.
At 30 June 20X3, the gross amount of the accounts receivable of Atom Ltd (Atom) was $10 000. At the same date, there was a related allowance for doubtful debts of $500. Revenue from sales is included in the statement of profit or loss and other comprehensive income in the same period as it is included in taxable profit. The tax rate is 30 per cent. At 30 June 20X3, Atom would recognise which one of the following items in its statement of financial position? a. deferred tax liability of $2850 b. deferred tax asset of $2850 c. deferred tax asset of $150 d. deferred tax liability of $150
The applicable enacted income tax rate is 32%. In Red's December 31, 5 points 2002 balance sheet, the related valuation allowance should be: Red Company was organized on January 2, 2002, had pretax accounting income of P1,500,000 and taxable income of P2,400,000 for the year ended December 31, 2002. Red expected to maintain this level of taxable income in future years. The only temporary difference is for accrued product warranty costs expected to be paid as follows: 2003 P300,000 150,000 2005 P150,000 300,000 2004 2006 # 8 Your answer
1. A VAT-registered business makes a sale of P10,000, inclusive of VAT. The VAT on the sale can be computed asa. P10,000 x 12%b. P10,000 12%.c. P10,000 x 12%/112%d. P10,000 -12%/112%2. A Non-VAT registered business makes total sales of P110.000 during a taxable period.The percentage tax can be computed asa. P110,000 x 3%.b. P110,000 3%.c. P110,000 x 3%/103%d. P110,000 3%/103%3. A VAT-registered business makes a sale of P34,500, inclusive of VAT. The amount of sale that was reported in the statement of comprehensive income can be computed asa. P34,500 x 112%.b. P34,500 112%.c. P34,500 x 12%/112%d. P34,500 12%/112%4. A VAT-registered business has total sales of P62,720 and total purchases of P25,088, both inclusive of VAT. How much is the net VAT payable to the BIR?a. 1,882 b. 4,032 c. 4,516 d. 5,2245. A Non-VAT business has total sales of P200,720. How much is the sales tax payable to the BIR?a. 2,007b. 4,015c. 4,516d. 6,022
DEF Co. reported taxable income of P8M in its income tax return for the 1st year of operations. The entity revealed the following temporary differences between financial income and taxable income for the year:Tax depreciation in excess of book depreciation, P800,000Accrual for product liability claim in excess of actual claim, P1,200,000Reported installment sales income in excess of taxable installment sales income, P2,600,000Income tax rate, 30%Compute for the deferred tax expense for the 1st year
The reported pretax financial income of Mechado Company is P1,800,000 and current income tax rate is 30%. Assume the following differences between the financial income and taxable income for the year: 1. Fines paid for late payment of taxes, P15,5002. Premiums paid on life insurance policy on officers, P200,000. Beneficiary named in the policies is Mechado Company.3. Impairment loss recognized on goodwill, P90,0004. Excess of tax depreciation over book depreciation, P30,0005. Excess of warranty expense over actual expenditures, P27,0006. Excess of estimated uncollectible accounts for financial reporting over the accounts actually written off for tax reporting, P12,000.7. Rent collected in advance of period earned, P35,000. Taxable income is?
1. On January 1, 20X0 ABC Ltd. owed the government GST of $320. During 20X1, the company was subject to a GST rate of 7% and had sales before considering GST of $320,000. The company can deduct any GST it pays on taxable purchases at 7%. These purchases in 20X1 were $200,000 before considering GST. At the end of 20X0, the company had owed the government GST of $420. What is the net GST amount that the company paid to the government in 20X1? 2. XYZ Ltd., which uses IFRS, operates a coffee shop and began a promotion to increase the sales of its dark roast coffee in December 20X0. Every time that a customer buys a cup of this type of coffee for $4.00 each in December, the customer gets a coupon for 1 free mini cookie that usually sells for $.40 each and costs the company $.20 to produce. Customers cannot use or redeem the coupons until January 20X1. In December 20X1, the company sold 4,800 cups of dark roast coffee. Management expects customers will redeem 75% of the coupons based on many…
A reconciliation of pretax financial statement income to taxable income is shown below for See Shipping for the year ended December 31, 2018, its first year of operations. The income tax rate is 40%. Pretax accounting income (income statement) $ 600,000 Installment income taxable upon receipt next year (30,000 ) Warranty expense in excess of deductible amount 5,000 Tax depreciation in excess of income statement amount (20,000 ) Taxable income (tax return) $ 555,000 What amount should See report as a noncurrent item related to deferred income taxes in its 2018 balance sheet? A) Deferred income tax asset of $18,000. B) Deferred income tax liability of $20,000. C) Deferred income tax liability of $45,000. D) Deferred income tax liability of $18,000
16. Umasa Company reported rental revenue of P2,210,000 in the cash basis income tax return for the year ended November 30, 2020. Rent receivable – Nov. 30, 2020 is P1,060,000; Rent receivable – Nov. 30, 2019 is P800,000; and Uncollectible rent written off during the fiscal year is P30,000. Under accrual basis, what amount should be reported as rent revenue? a. P1,920,000 b. P2,240,000 c. P2,500,000 d. P1,980,000
Dan plc is preparing its financial statements for the year ended 31 December 20X7. Its initial trial balances show the following balance: Income tax payable on 1 January 20X7 Income tax paid M 337,850 £ 351,083 The income tax paid during the year ended 31 December 20X7 completely settles the 20X6 liability. The total estimated tax due on the profits for the year ended 31 December 20X7 is 402,917 Dan plc should record the following journal at 31 December 20X7 A. Debit Income tax expense £389,684; Credit Income tax payable £51,834, Credit Income tax paid £337,050 B. Debit Income tax expense £389,684, Credit Income tax payable £65,067, Credit Income tax paid £324,617 C. Debit Income tax expense £402,917, Credit Income tax payable £65,067, Credit Income tax paid £337,850 D. Debit Income tax expense £402,917, Credit Income tax payable £51,834; Credit Income tax paid £351,083