Problem 16-13 (IFRS)tax rate is 30%.P450,000 and no deferred tax liability.provision of P500,000The deferred tax asset was due to atime it was tax deductible.P1,000,000 collected in 2019 but earned only in 2020.recognized eachLife insurance premiums of P200,000 wereyear on key officers for 2020 and 2021.The entity paid for a two-year casualty insurance forP6,000,000 on January 1, 2020. The entire premium is tardeductible when paid.The entity collected rent from leasing some of its equipment.The rent is recognized as revenue when earned but taxablewhen collected.202020213,300,0002,500,0003,500,0003,300,000Rent collectedRent earnedThe entity had trading investments. All gains and losses arerecognized for tax purposes when the investments are sold.During 2020, the entity recognized P1,700,000 unrealizedlosses 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 for2020 and 2021.3. Compute deferred tax asset and deferred tax liability onDecember 31, 2020 and 2021.4. Prépare journal entries for 2020 and 2021.560CSScanned with CamScanner

Tax is the liability towards the government for the individual to be paid for the income earned.

Problem 16-13 (IFRS) Complex Company reported pretax accounting income of P12,800,000 for 2020 and P18,300,000 for 2021. The income On January 1, 2020, the entity had deferred tax asset of tax rate is 30%. P450,000 and no deferred tax liability. L wOs due to a provision of P500,000 2020

Problem 16-13 (IFRS) Complex Company reported pretax accounting income of P12,800,000 for 2020 and P18,300,000 for 2021. The income On January 1, 2020, the entity had deferred tax asset of tax rate is 30%. P450,000 and no deferred tax liability. L wOs due to a provision of P500,000 2020

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

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.

Question

100%

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
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