In 2014, PEACE COMPANY received interest income of 100,000 on government obligations and P600,000 in royalties under a licensing agreement. Royalties are reported as taxable income in the year received, but in the financial statements, royalties are recognized as income in the year earned and amount to P400,000 for the year ended December 31, 2014. The effective income tax rate of Collector Corporation is 32%. Using the income statement liability method, by what amount would the deferred income tax asset account balance increase?

In 2014, PEACE COMPANY received interest income of 100,000 on government obligations and P600,000 in royalties under a licensing agreement. Royalties are reported as taxable income in the year received, but in the financial statements, royalties are recognized as income in the year earned and amount to P400,000 for the year ended December 31, 2014. The effective income tax rate of Collector Corporation is 32%. Using the income statement liability method, by what amount would the deferred income tax asset account balance increase?

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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