For the year ended December 31, 2021, White Company reported pretax financial income of P5,000,000, while It’s taxable income amounts to P4,928,000. For the year 2021, the company’s book depreciation was P 268,000, while for tax purposes, the depreciation taken was P340,000. This temporary difference will reverse over the years 2022 through 2024 as follows: 2022-P28,000; 2023-P 25,000; 2024- P19,000. The enacted tax rates are as follows: 2021: 30% 2022: 32% 2023: 34% 2024: 36% How much deferred tax asset/deferred tax liability was reported by White Company on December 31, 2021? Choices: Deferred tax asset o P24,300 Deferred tax asset o P21,600 Deferred tax liability of P24,300 Deferred tax liability of P21,000

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Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.