Helping tags: Accounting, Employee Benefits and Income Taxes How much is the net income after incometax provision at December 31, 2003?T Company reports the following revenues and expenses in Its pretax financial income for theyear ended December 31, 2003:RevenuesP229,600ExpensesPretax financial income(160,100)P 69,500The revenues induded in pretax financial Income are the same amount as the revenuesincluded in the company's taxable income. A reconciliation of the expenses reported forpretax financial income to the expenses reported for taxable income, however, reveals fourdifferences:a. Depreciation deducted for financial reporting exceeded depreciation deducted for incometaxes by P11,000.b. Percentage depletion deduction for income taxes exceeded depletion deducted forfinancial reporting by P15,600.c. Warranty costs deducted for Income taxes exceeded warranty expenses deducted forfinancial reporting by P8,900.d. Legal expense of P9,800 was deducted for financial reporting, it will be deducted forincome taxes when paid in a future year.The company expenses its percentage depletion to exceed its cost depletion in each of thenext 5 years by the same amount as in 2000. At the end of 2000, the other three expensesare expected to result in total future taxable or deductible amounts as follows:TotalsFuture taxable amountsDepreciation expense differenceP63,000Future deductible amountsWarranty expense differenceLegal expense difference48,4009,800At the beginning of 2003, the company had a deferred tax liability of P22,200 related to thedepreciation difference and a deferred tax asset of P17,190 related to the warrantydifference. The income tax rate for 2003 is 35%, but in 2002 Congress enacted a 30% ratefor 2004 and thereafter.Your answer

We need to calculate income tax provision first to find out net income after tax provision.

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How much is the net income after income tax provision at December 31, 2003?

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Question

Helping tags: Accounting, Employee Benefits and Income Taxes

How much is the net income after income
tax provision at December 31, 2003?
T Company reports the following revenues and expenses in Its pretax financial income for the
year ended December 31, 2003:
Revenues
P229,600
Expenses
Pretax financial income
(160,100)
P 69,500
The revenues induded in pretax financial Income are the same amount as the revenues
included in the company's taxable income. A reconciliation of the expenses reported for
pretax financial income to the expenses reported for taxable income, however, reveals four
differences:
a. Depreciation deducted for financial reporting exceeded depreciation deducted for income
taxes by P11,000.
b. Percentage depletion deduction for income taxes exceeded depletion deducted for
financial reporting by P15,600.
c. Warranty costs deducted for Income taxes exceeded warranty expenses deducted for
financial reporting by P8,900.
d. Legal expense of P9,800 was deducted for financial reporting, it will be deducted for
income taxes when paid in a future year.
The company expenses its percentage depletion to exceed its cost depletion in each of the
next 5 years by the same amount as in 2000. At the end of 2000, the other three expenses
are expected to result in total future taxable or deductible amounts as follows:
Totals
Future taxable amounts
Depreciation expense difference
P63,000
Future deductible amounts
Warranty expense difference
Legal expense difference
48,400
9,800
At the beginning of 2003, the company had a deferred tax liability of P22,200 related to the
depreciation difference and a deferred tax asset of P17,190 related to the warranty
difference. The income tax rate for 2003 is 35%, but in 2002 Congress enacted a 30% rate
for 2004 and thereafter.
Your answer

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