2. An entity reports profit before bonus and taxes of P1,800.00 during the year. The entity has an established policy of paying its top management a 12% bonus on annual profit. The entity is subject to an income tax rate of 30%. Requirements: Compute for the amount of bonus under each of the following bonus schemes: a. Bonus is based on profit before deducting bonus and income tax. b. Bonus is based on profit after deducting bonus but before deducting income tax. C. Bonus is based on profit before deducting bonus but after deducting income tax.

2. An entity reports profit before bonus and taxes of P1,800.00 during the year. The entity has an established policy of paying its top management a 12% bonus on annual profit. The entity is subject to an income tax rate of 30%. Requirements: Compute for the amount of bonus under each of the following bonus schemes: a. Bonus is based on profit before deducting bonus and income tax. b. Bonus is based on profit after deducting bonus but before deducting income tax. C. Bonus is based on profit before deducting bonus but after deducting income tax.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

2 An entity reports profit before bonus and taxes of P1,800.0m
during the year. The entity has an established policy of paying
its top management a 12% bonus on annual profit. The entity
is subject to an income tax rate of 30%.
Requirements: Compute for the amount of bonus under each of the
following bonus schemes:
a. Bonus is based on profit before deducting bonus and income
tax.
b. Bonus is based on profit after deducting bonus but before
deducting income tax.
C. Bonus is based on profit before deducting bonus but after
deducting income tax.
d. Bonus is based on profit after deducting both bonus and
income tax.

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