8. GERMANY Company prepared a reconciliation between pretax financial income and taxable income at the end...
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8. GERMANY Company prepared a reconciliation between pretax financial income and taxable income at the end of 2022 as follows (see image below). The estimated litigation expense of P1,250,000 will be deductible in 2023 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of P500.000 each for 2023 and 2024. The estimated liability for litigation is classified as non-current and the installment accounts receivable are classified as P500,000 current and P500,000 non-current. The income tax rates are: 2022 - 30%; 2023 -32%; and 2024 -35%. Pretax financial income Estimated litigation expense Installment Sales Taxable income 500,000 1,250,000 (1,000,000) 750,000 How much is the Total Income Tax Expense in 2022? • a. 160,000 b. 150,000 c. 225,000 d. 145,000 • How much is the Deferred Tax Liability at December 31, 2022? a. 400,000 b. 335,000 C. 300,000 d. 320,000 • How much is the Deferred Tax Asset at December 31, 2022? a. 375,000 b. 335,000 c. 320,000 d. 400,000 9. GREECE Company computed a pretax financial income of P2.200.000 for its first year of operations ended December 31, 2022. In preparing the income tax return, the accountant determined the following differences between financial and taxable income: Non-deductible expenses - P400,000 Non-taxable revenues - P150,000 Temporary difference (installment sales reported in financial income but not in taxable income) - P700,000 The temporary difference is expected so reverse in 2023 - P140,000; 2024 - P320,000; and 2025 - P240,000. The enacted tax rates are 2022 - 30%, 2023 -32%. 2024 - 34%, and 2025 -35%. • How much is the income Tax Expense Current in 2022? a. 945,000 b. 762,600 c. 525,000 d. 237,600 How much is the Net Income after Tax in 2022? a. 1,675,000 b. 1,437,400 c. 987,400 d. 1,465,000 10. HUNGARY Company has taxable income for the year 2022 amounting to P5,000,000. The tax bases for its assets and liabilities on December 31, 2022 are equal to their carrying amounts except for the following (see image below). The company's statement of financial position on December 31, 2021, showed a deferred tax liability of P410,000 and a deferred tax asset of P480,000. The company is subject to an income tax rate of 30%. The company paid no income tax during 2022 relating to 2022 operations. Accounts Receivable Carrying Value 1,900,000 Tax Base 1,750,000 Inventory 950,000 850,000 Equipment 10,000,000 8,800,000 Warranty Liability 800,000 200,000 Unearned Subscription 500,000 100,000 • How much is the Taxable Temporary Difference? a. 1,000,000 b. 1,300,000 c. 2,450,000 d. 1,450,000 • How much is the Deductible Temporary Difference? a. 2,450,000 b. 1,000,000 c. 1,450,000 d. 1,150,000 How much is the Total Income Tax Expense (Benefit) in 2022? a. 1,705,000 b. 1,345,000 c. 1,500,000 d. 1,655,000 11. ICELAND Company reported a profit before income tax of P200,000 in 2022. There were no differences between taxable profit and accounting profit. The revenue is P5,000,000 while the cost of sales is P2,250,000. The corporate tax rate is 25% while the minimum corporate income tax (MCIT) rate is 2%. ICELAND is expected to operate profitably in the succeeding years and its normal corporate income tax shall exceed the MCIT. The company started its operations in 2017. • How much is the Income Tax Expense Current in 2022? . a. 50,000 b. 55,000 C. 60,000 d. 70,000 How much is the Income Tax Payable at December 31, 2022? a. 50,000 b. 70,000 C. 60,000 d. 55,000 8. GERMANY Company prepared a reconciliation between pretax financial income and taxable income at the end of 2022 as follows (see image below). The estimated litigation expense of P1,250,000 will be deductible in 2023 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of P500.000 each for 2023 and 2024. The estimated liability for litigation is classified as non-current and the installment accounts receivable are classified as P500,000 current and P500,000 non-current. The income tax rates are: 2022 - 30%; 2023 -32%; and 2024 -35%. Pretax financial income Estimated litigation expense Installment Sales Taxable income 500,000 1,250,000 (1,000,000) 750,000 How much is the Total Income Tax Expense in 2022? • a. 160,000 b. 150,000 c. 225,000 d. 145,000 • How much is the Deferred Tax Liability at December 31, 2022? a. 400,000 b. 335,000 C. 300,000 d. 320,000 • How much is the Deferred Tax Asset at December 31, 2022? a. 375,000 b. 335,000 c. 320,000 d. 400,000 9. GREECE Company computed a pretax financial income of P2.200.000 for its first year of operations ended December 31, 2022. In preparing the income tax return, the accountant determined the following differences between financial and taxable income: Non-deductible expenses - P400,000 Non-taxable revenues - P150,000 Temporary difference (installment sales reported in financial income but not in taxable income) - P700,000 The temporary difference is expected so reverse in 2023 - P140,000; 2024 - P320,000; and 2025 - P240,000. The enacted tax rates are 2022 - 30%, 2023 -32%. 2024 - 34%, and 2025 -35%. • How much is the income Tax Expense Current in 2022? a. 945,000 b. 762,600 c. 525,000 d. 237,600 How much is the Net Income after Tax in 2022? a. 1,675,000 b. 1,437,400 c. 987,400 d. 1,465,000 10. HUNGARY Company has taxable income for the year 2022 amounting to P5,000,000. The tax bases for its assets and liabilities on December 31, 2022 are equal to their carrying amounts except for the following (see image below). The company's statement of financial position on December 31, 2021, showed a deferred tax liability of P410,000 and a deferred tax asset of P480,000. The company is subject to an income tax rate of 30%. The company paid no income tax during 2022 relating to 2022 operations. Accounts Receivable Carrying Value 1,900,000 Tax Base 1,750,000 Inventory 950,000 850,000 Equipment 10,000,000 8,800,000 Warranty Liability 800,000 200,000 Unearned Subscription 500,000 100,000 • How much is the Taxable Temporary Difference? a. 1,000,000 b. 1,300,000 c. 2,450,000 d. 1,450,000 • How much is the Deductible Temporary Difference? a. 2,450,000 b. 1,000,000 c. 1,450,000 d. 1,150,000 How much is the Total Income Tax Expense (Benefit) in 2022? a. 1,705,000 b. 1,345,000 c. 1,500,000 d. 1,655,000 11. ICELAND Company reported a profit before income tax of P200,000 in 2022. There were no differences between taxable profit and accounting profit. The revenue is P5,000,000 while the cost of sales is P2,250,000. The corporate tax rate is 25% while the minimum corporate income tax (MCIT) rate is 2%. ICELAND is expected to operate profitably in the succeeding years and its normal corporate income tax shall exceed the MCIT. The company started its operations in 2017. • How much is the Income Tax Expense Current in 2022? . a. 50,000 b. 55,000 C. 60,000 d. 70,000 How much is the Income Tax Payable at December 31, 2022? a. 50,000 b. 70,000 C. 60,000 d. 55,000
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Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
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