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During 2021, Beal Company became involved in a tax dispute with the BIR. On December 31, 2021, the entity's tax advisor believed that an unfavorable outcome was probable and the best estimate of additional tax was P500,000 but could be as much as P650,000. After the 2021 financial statements were issued, the entity received and accepted a BIR settlement offer of P550,000. What amount of accrued liability should be reported December 31, 2021? on a. 650,000 b. 550,000 c. 500,000 d. 0.

During 2021, Beal Company became involved in a tax dispute with the BIR. On December 31, 2021, the entity's tax advisor believed that an unfavorable outcome was probable and the best estimate of additional tax was P500,000 but could be as much as P650,000. After the 2021 financial statements were issued, the entity received and accepted a BIR settlement offer of P550,000. What amount of accrued liability should be reported December 31, 2021? on a. 650,000 b. 550,000 c. 500,000 d. 0.

FINANCIAL ACCOUNTING
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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Problem 4-21 (with solution)

Problem 4-21 (AICPA Adapted) During 2021, Beal Company became involved in a tax dispute with the BIR. On December 31, 2021, the entity's tax advisor believed that an unfavorable outcome was probable and the best estimate of additional tax was P500,000 but could be as much as P650,000. After the 2021 financial statements were issued, the entity received and accepted a BIR settlement offer of P550,000. What amount of accrued liability should be reported on December 31, 2021? a. 650,000 b. 550,000 c. 500,000 d.
Transcribed Image Text:Problem 4-21 (AICPA Adapted) During 2021, Beal Company became involved in a tax dispute with the BIR. On December 31, 2021, the entity's tax advisor believed that an unfavorable outcome was probable and the best estimate of additional tax was P500,000 but could be as much as P650,000. After the 2021 financial statements were issued, the entity received and accepted a BIR settlement offer of P550,000. What amount of accrued liability should be reported on December 31, 2021? a. 650,000 b. 550,000 c. 500,000 d.
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Problem 2-28 (AICPA Adapted) The following trial balance of Trey Company at December 31, 2005 has been adjusted except for income tax expense. Cash Accounts receivable, net Prepaid taxes Inventory Property, plant and equipment Accounts payable Common stock Retained earnings Foreign currency translation adjustment Revenues Expenses a. 20,600,000 b. 18,600,000 c. 17,000,000 d. 19,000,000 5,000,000 8,000,000 1,600,000 6,000,000 17,000,000 a. 10,000,000 b. 8,400,000 2,400,000 d. 10,000,000 50,000,000 During 2005, estimated tax payments of P1,600,000 were charged to prepaid taxes. Trey has not yet recorded income tax expense. The tax rate is 32%. Included in accounts receivable is P3,000,000 due from a customer. Special terms granted to this customer require payment in equal semiannual installments of P500,000 every April 1 and October 1. 7,100,000 6,000,000 10,000,000 20,000,000 5,000,000 1. In Trey's December 31, 2005 balance sheet, what amount should be reported as total current assets? 15,000,000 50,000,000 2. In Trey's December 31, 2005 balance sheet, what amount should be reported as total retained earnings?
Transcribed Image Text:Problem 2-28 (AICPA Adapted) The following trial balance of Trey Company at December 31, 2005 has been adjusted except for income tax expense. Cash Accounts receivable, net Prepaid taxes Inventory Property, plant and equipment Accounts payable Common stock Retained earnings Foreign currency translation adjustment Revenues Expenses a. 20,600,000 b. 18,600,000 c. 17,000,000 d. 19,000,000 5,000,000 8,000,000 1,600,000 6,000,000 17,000,000 a. 10,000,000 b. 8,400,000 2,400,000 d. 10,000,000 50,000,000 During 2005, estimated tax payments of P1,600,000 were charged to prepaid taxes. Trey has not yet recorded income tax expense. The tax rate is 32%. Included in accounts receivable is P3,000,000 due from a customer. Special terms granted to this customer require payment in equal semiannual installments of P500,000 every April 1 and October 1. 7,100,000 6,000,000 10,000,000 20,000,000 5,000,000 1. In Trey's December 31, 2005 balance sheet, what amount should be reported as total current assets? 15,000,000 50,000,000 2. In Trey's December 31, 2005 balance sheet, what amount should be reported as total retained earnings?
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