ABC Inc. began operations on July 1,2019. The company recognizes income from long term construction contracts under the percentage of completion method in its financial statements and under the cost recovery method for income tax purposes. Income under each are as follows: 2019 Cost recovery- P 0 % of completion- P 700,000 2020 Cost recovery- P 800,000 % of completion- P 1,280,000 2021 Cost recovery- P 1,350,000 % of completion- P 1,700,000 The income tax rate was 32% for 2019. Based on a new law, for years after 2019, the tax rate is 34%. There are no other temporary differences. ABC should report in its December 31,2021 a deferred tax liability of
ABC Inc. began operations on July 1,2019. The company recognizes income from long term construction contracts under the percentage of completion method in its financial statements and under the cost recovery method for income tax purposes. Income under each are as follows: 2019 Cost recovery- P 0 % of completion- P 700,000 2020 Cost recovery- P 800,000 % of completion- P 1,280,000 2021 Cost recovery- P 1,350,000 % of completion- P 1,700,000 The income tax rate was 32% for 2019. Based on a new law, for years after 2019, the tax rate is 34%. There are no other temporary differences. ABC should report in its December 31,2021 a deferred tax liability of
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ABC Inc. began operations on July 1,2019. The company recognizes income from long term construction contracts under the percentage of completion method in its financial statements and under the cost recovery method for income tax purposes. Income under each are as follows:
2019 Cost recovery- P 0
% of completion- P 700,000
2020 Cost recovery- P 800,000
% of completion- P 1,280,000
2021 Cost recovery- P 1,350,000
% of completion- P 1,700,000
The income tax rate was 32% for 2019. Based on a new law, for years after 2019, the tax rate is 34%. There are no other temporary differences. ABC should report in its December 31,2021 a
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