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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Problem 4-21 (with solution)
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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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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