For the year ended December 31, 2006, Grim Company's pretax financial income was P2,000,000 and its taxable income was P1,500,000.  the difference is due to the following: Interest income as savings deposit, 700,000 Premium expense on keyman life insurance,   (200,000) Total            500,000 The income tax rate is 35%.

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Q: (EBIT).

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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.