The following information pertain to Company A's tax return during the current year:

• The company bought a machinery in the beginning of 2018 for P2,000,000 and was depreciated on a straight line basis. At the beginning of the current year, 2020, the machine had a carrying amount of P1,200,000. Depreciation expense for tax purposes is 25% more than the books.
• The company had invested in treasury bills in the prior years, the interest on which was excluded in the tax returns. In 2020, a total of P500,000 was earned as interest on these investments.
• The company is currently leasing one of its unused buildings. In October 1, 2019, a contract was entered with another company to let the building for P1,200,000 covering a period of one year. In 2020, the same contract was renewed after the original contract expired. The P1,200,000 is paid in full to Company A at the commencement of both contracts.
• In 2020, the company paid a total of P200,000 for the cost of repairing products covered under warranty. At the end of the year, the company recognized an expense of P500,000 to accrue estimated future warranty liability.

Company A reported total taxable income in 2020 of P3,000,000.

Enacted rate is constant at 30%.

Determine the following balances for the year 2020 (ROUND FINAL ANSWERS OFF TO NEAREST PESO):

1) Pretax accounting income per books

Answer rating: 100% (QA)

Answer Explanation Company A Comparative Income Statement For the Years Ended December 31 202020192018 2020 2019 2018 Revenues 20000000 28000000 26000000 Cost of Goods Sold 11800000 16240000 15200000 ... View the full answer