ABC Company reported pretax financial income of P 6,500,000 and P 8,200,000 for years 2019 and 2020,
Question:
ABC Company reported pretax financial income of P 6,500,000 and P 8,200,000 for years 2019 and 2020, respectively. The tax bases for its asset and liabilities on December 31, 2019, and December 31, 2020, were equal to their carrying values except for the property, plant, and equipment and provision for warranty. Equipment costing P 4,000,000 with an estimated residual value of P 400,000 and an estimated useful life of 8 years was acquired on January 1, 2019. This asset was depreciated using the straight-line method for financial reporting purposes and some of the year's digits method for tax purposes.
For years 2019 and 2020, the company recorded warranty expenses in its books amounting to P 325,000 and P 430,000, respectively. However, actual warranty expenditures were posted in accounts amounting to P 290,000 and P 330,000, for years 2019 and 2020. There are no temporary differences during the 2 year period. The income tax rate for all years is 30%.
Required
- How much is the profit for the year 2019?
- How much is the taxable amount for year 2019?
- How much was the deferred tax asset at December 31, 2020?
- How much was the deferred tax asset at December 31, 2019?
- How much was the deferred tax liability at December 31, 2020?
- How much is the taxable amount for year 2020?
- How much was the deferred tax liability at December 31, 2019?
- How much is the profit for the year 2020?
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield