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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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
Transcribed Image Text:Problem 16-13 (IFRS)
tax rate is 30%.
P450,000 and no deferred tax liability.
provision of P500,000
The deferred tax asset was due to a
time it was tax deductible.
P1,000,000 collected in 2019 but earned only in 2020.
recognized each
Life insurance premiums of P200,000 were
year on key officers for 2020 and 2021.
The entity paid for a two-year casualty insurance for
P6,000,000 on January 1, 2020. The entire premium is tar
deductible when paid.
The entity collected rent from leasing some of its equipment.
The rent is recognized as revenue when earned but taxable
when collected.
2020
2021
3,300,000
2,500,000
3,500,000
3,300,000
Rent collected
Rent earned
The entity had trading investments. All gains and losses are
recognized for tax purposes when the investments are sold.
During 2020, the entity recognized P1,700,000 unrealized
losses on trading investments which were sold in 2021.
Required:
1. Compute taxable income for 2020 and 2021.
2. Compute current tax expense and total tax expense for
2020 and 2021.
3. Compute deferred tax asset and deferred tax liability on
December 31, 2020 and 2021.
4. Prépare journal entries for 2020 and 2021.
560
CS
Scanned with CamScanner
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