Acer, Inc. reported a taxable income of P8,000,000 in its Form 1702 for its first year of operations, calendar year 2020. Below are the differences between taxable and financial income: ·         Excess tax depreciation over accounting depreciation: P500,000 ·         Revenue collected for tax in excess of accounting revenue: P2,000,000 ·         Tax penalties expensed in the income statement: P200,000 Income tax rate is 30%. What is the NET DEFERRED TAX EXPENSE for 2020?   a. 450,000 benefit b. 450,000 expense c. 510,000 benefit d. 510,000 expense

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A: Hey, since there are multiple sub-parts posted, we will answer first three sub-parts.

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Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.