1. Sinigang na Baboy Company, a domestic corporation, started operations in the latter part of the first quarter of 2020. The company opted to report its financial statements for the nine months ended December 31, 2020. The pretax financial income for the period was P1,200,000. In preparing the income tax return for the period, the tax accountant determined the following differences between 2020 financial income and taxable income.
2. a. Because of non-compliance with some local government requirements, the city treasurer assessed fines and penalties totaling P22,500.
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4. b. The company made a donation to Hospicio de San Jose amounting to P25,000. Tax laws consider a donation of this kind as non-deductible in full amount.
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6. c. Cash dividends received from equity investments in a domestic corporation, P5,200.
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8. d. Rent was paid in advance for one year amounting to P240,000. The financial statement of Sinigang na Baboy Company reported prepaid rent of P60,000.
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10. e. The company uses straight-line depreciation for all its depreciable assets and sum-of-the-years' digits for tax purposes, resulting to a difference in depreciation expense of P50,000.
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12. Currently, the income tax rate is 30%.  There are no changes in tax rates that have been enacted or substantially enacted for future years.
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14. How much is the deferred tax liability at December 31, 2020?

Answer rating: 100% (QA)

To calculate the deferred tax liability at December 31 2020 we need to determine the temporary diffe... View the full answer