An entity had the following events and transactions during 2020:   Depreciation for 2019 was understated by P500,000 A litigation settlement resulted in a loss of P2,000,000 The inventory on December 31, 2018 was overstated by P800,000 The entity disposed of a recreational division at a loss P1,500,000 The income tax rate is 30%   What total amount of loss should be included in income from continuing operations for 2020? a. 2,000,000 1,400,000 3,500,000 2,450,000

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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.