PP Corp. reports net income on its 2020 financial statements before income tax expense of P400,000. PP has been profitable in the past and expects to continue to be profitable. The company expensed warranty cost in 2017 for P35,000 which is expected to impact tax return in 2021. PP also had P60,000 in revenue that will not be taxed until 2022. PP has a tax rate for 2020 of 30% and an enacted rate of 40% beyond 2020. In addition, PP made four estimated tax payments of P25,000 each in 2020.

 

Questions:

1. How much will PP Corp. report as taxable income on its income statement for December 31, 2020? 

2. How much would PP Corp. report as current year income tax expense on the December 31, 2020 income statement?

3. How much would PP Corp. report as deferred income tax expense on the December 31, 2020 income statement? 

Answer rating: 100% (QA)

1 P400000 The taxable income is the net income before income tax expense which is P400000 2 P120000 ... View the full answer