Lax Company at the end of 2019, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income P900,000; Estimated litigation expense P1,200,000; Extra depreciation for taxes (P1,800,000); Taxable income P400,000. The estimated litigation expense of P1,200,000 will be deductible in 2020 when it is expected to be paid. Use of the depreciable asset will result in taxable amounts of P600,000 in each of the next three years. The income tax rate is 30% for all years. Income tax payable is P0 P120,000 P180,000 P270,000
Lax Company at the end of 2019, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income P900,000; Estimated litigation expense P1,200,000; Extra depreciation for taxes (P1,800,000); Taxable income P400,000. The estimated litigation expense of P1,200,000 will be deductible in 2020 when it is expected to be paid. Use of the
- P0
- P120,000
- P180,000
- P270,000
Norie Company leased an asset on a finance lease. The present value of the lease payments total P686,000 and the fair value of the asset is P750,000. The asset has a useful life of 5 years and the lease term is 4 years. The bargain purchase option for the asset at the end of its useful life is nominal and is substantially lower than the value of the asset at that date. Depreciation for the asset is computed using
- P187,500
- P150,000
- P171,500
- P137,200
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