EL Co. reported net income for the current year 2021 at ₱560,000 before provision of income tax during the year. To compute the provision for income tax, the following data are provided: • Tax depreciation in excess of financial statement amount - ₱ 36,500 • Interest income received - ₱ 80,500 • Rent received in advance - ₱ 175,000 • Dividend income - ₱ 91,700 • Estimated tax payment in the current year - ₱ 65,000 • Provision for bad debts not yet recognized for tax purposes on the current year - ₱ 48,300 • Tax penalties due to late filing on tax return - ₱ 20,000 • Corporate tax rate – 30% Required: 14. What is the total income tax expense for the year? 15. What is the net income after tax?

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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.