DD Co. established a P90 million liability at the end of 2020 for the estimated litigation settlement for manufacturing defects. All related costs will be paid and deducted on the tax return in 2021. Also at the end of 2020, the company has P50 million of temporary differences due to excess depreciation for tax purposes, P7 million of which will reverse in 2021. The enacted tax rate for all years is 40%, and the company pays taxes of P64 million on P160 million of taxable income in 2020. DD expects to have taxable income in 2021. Determine the deferred tax liability to be reported at the end of 2021.
DD Co. established a P90 million liability at the end of 2020 for the estimated litigation settlement for manufacturing defects. All related costs will be paid and deducted on the tax return in 2021. Also at the end of 2020, the company has P50 million of temporary differences due to excess depreciation for tax purposes, P7 million of which will reverse in 2021. The enacted tax rate for all years is 40%, and the company pays taxes of P64 million on P160 million of taxable income in 2020. DD expects to have taxable income in 2021. Determine the deferred tax liability to be reported at the end of 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
DD Co. established a P90 million liability at the end of 2020 for the estimated litigation settlement for manufacturing defects. All related costs will be paid and deducted on the tax return in 2021. Also at the end of 2020, the company has P50 million of temporary differences due to excess
Determine the
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education