16. Red Company was organized on January 2, 2002, had pretax accounting income of P1,500,000 and taxable income of P2,400,000 for the year ended December 31, 2002. Red expected to maintain this level of taxable income in future years. The only temporary difference is for accrued product warranty costs expected to be paid as follows: 2003 P300,000 150,000 2005 P150,000 300,000 2004 2006 The applicable enacted income tax rate is 32%. In Red's December 31, 2002 balance sheet, the deferred income tax asset and related valuation allowance should be: Deferred tax asset Valuation alowance Deferred tax asset Valuation allowance (a) (b) PO PO (c) (d) P288,000 PO PO P288,000 P288,000 P288,000
16. Red Company was organized on January 2, 2002, had pretax accounting income of P1,500,000 and taxable income of P2,400,000 for the year ended December 31, 2002. Red expected to maintain this level of taxable income in future years. The only temporary difference is for accrued product warranty costs expected to be paid as follows: 2003 P300,000 150,000 2005 P150,000 300,000 2004 2006 The applicable enacted income tax rate is 32%. In Red's December 31, 2002 balance sheet, the deferred income tax asset and related valuation allowance should be: Deferred tax asset Valuation alowance Deferred tax asset Valuation allowance (a) (b) PO PO (c) (d) P288,000 PO PO P288,000 P288,000 P288,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
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Please solve for RED COMPANY. Thank you.
Transcribed Image Text:15. Elf Company prepared the following reconciliations of its pretax financial statement income to
taxable income for the year ended December 31, 2000, its first year of operations:
Pretax financial income
Nontaxable interest received
P1,600,000
( 50,000)
Long-term loss accrual in excess of
deductible amount
100,000
Depreciation in excess of financial
statement income
( 250,000)
P1400.000
Taxable income
Assume the income tax is 32%, what amount should Elf report as income tax expense
current portion of its 2000 income statement?
(a) P416,000
(b) P448,000
(c) P496,000
(d) P512,000
B
16. Red Company was organized on January 2, 2002, had pretax accounting income of
P1,500,000 and taxable income of P2,400,000 for the year ended December 31, 2002. Red
expected to maintain this level of taxable income in future years. The only temporary
difference is for accrued product warranty costs expected to be paid as follows:
2003
2004
P300,000
150,000
2005
P150,000
300,000
2006
The applicable enacted income tax rate is 32%. In Red's December 31, 2002 balance sheet,
the deferred income tax asset and related valuation allowance should be:
Deferred tax asset Valuation allbwance
Deferred tax asset Valuation allowance
(a)
(b)
(c)
(d)
PO
PO
P288,000
PO
PO
P288,000
P288,000
P288,000
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