Income Tax. Deferred Tax Liability and Deferred Tax Asset (PAS 12) Problem 11. The 2015 income statement of Rob Inc. reported a financial income of P3,000,000. The tax accountant and tax auditor have found the following items included in such amount: Capital gain from the sale of a land classified as capital asset Illegal contribution to political parties and candidates Interest income from a 6-year time deposit Representation expenses in excess of the amount allowed by NIRC Based on the analysis conducted by the accountant and tax auditor, they also found out the following differences in tax and accounting treatments: Unearned revenue of P200,000 was recorded by Rob Inc. in its accounting books but was reported as income in the corporate income tax return. P300,000 200,000 500,000 400,000 Installment sales of P300,000 was recorded by Rob Inc. in its accounting books but was only collected on year 2016. • Provision for lawsuit for P400,000 was recognized by Rob Inc. in its accounting books but was only paid on year 2016. Rob Inc. capitalized a development cost for P500,000 but was deducted as expenses in the corporate income tax return. Aside from the above mentioned timing differences, the following differences regarding the book value and tax base of the following assets and liabilities were also discovered: Book Value Tax Base P1,000,000 1,500,000 2,000,000 Building Notes Payable Machinery Bonds Payable 3,000,000 The 2015 current tax rate is 30% while the 2016 and future tax rate is 40%. Required: Based on the result of your audit, determine the following: 1. Total Income Tax Expense for the year ended December 31, 2015 2. Current Tax Expense for the year ended December 31, 2015 3. Net Deferred Tax Expense for the year ended December 31, 2015 P1,200,000 1,800,000 1,600,000 2,500,000 4. Deferred Tax Liability as of December 31, 2015 5. Deferred Tax Asset as of December 31, 2015
Income Tax. Deferred Tax Liability and Deferred Tax Asset (PAS 12) Problem 11. The 2015 income statement of Rob Inc. reported a financial income of P3,000,000. The tax accountant and tax auditor have found the following items included in such amount: Capital gain from the sale of a land classified as capital asset Illegal contribution to political parties and candidates Interest income from a 6-year time deposit Representation expenses in excess of the amount allowed by NIRC Based on the analysis conducted by the accountant and tax auditor, they also found out the following differences in tax and accounting treatments: Unearned revenue of P200,000 was recorded by Rob Inc. in its accounting books but was reported as income in the corporate income tax return. P300,000 200,000 500,000 400,000 Installment sales of P300,000 was recorded by Rob Inc. in its accounting books but was only collected on year 2016. • Provision for lawsuit for P400,000 was recognized by Rob Inc. in its accounting books but was only paid on year 2016. Rob Inc. capitalized a development cost for P500,000 but was deducted as expenses in the corporate income tax return. Aside from the above mentioned timing differences, the following differences regarding the book value and tax base of the following assets and liabilities were also discovered: Book Value Tax Base P1,000,000 1,500,000 2,000,000 Building Notes Payable Machinery Bonds Payable 3,000,000 The 2015 current tax rate is 30% while the 2016 and future tax rate is 40%. Required: Based on the result of your audit, determine the following: 1. Total Income Tax Expense for the year ended December 31, 2015 2. Current Tax Expense for the year ended December 31, 2015 3. Net Deferred Tax Expense for the year ended December 31, 2015 P1,200,000 1,800,000 1,600,000 2,500,000 4. Deferred Tax Liability as of December 31, 2015 5. Deferred Tax Asset as of December 31, 2015
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Income Tax. Deferred Tax Liability and Deferred Tax Asset (PAS 12)
Problem 11. The 2015 income statement of Rob Inc. reported a financial income of P3,000,000. The
tax accountant and tax auditor have found the following items included in such amount:
Capital gain from the sale of a land classified as capital asset
Illegal contribution to political parties and candidates
Interest income from a 6-year time deposit
Representation expenses in excess of the amount allowed by NIRC 400,000
P300,000
200,000
500,000
Based on the analysis conducted by the accountant and tax auditor, they also found out the following
differences in tax and accounting treatments:
• Unearned revenue of P200,000 was recorded by Rob Inc. in its accounting books but was
reported as income in the corporate income tax return.
• Installment sales of P300,000 was recorded by Rob Inc. in its accounting books but was only
collected on year 2016.
• Provision for lawsuit for P400,000 was recognized by Rob Inc. in its accounting books but was
only paid on year 2016.
• Rob Inc. capitalized a development cost for P500,000 but was deducted as expenses in the
corporate income tax return.
Aside from the above mentioned timing differences, the following differences regarding the
book value and tax base of the following assets and liabilities were also discovered:
Book Value
Tax Base
Building
Notes Payable
Machinery
Bonds Payable
P1,000,000
1,500,000
2,000,000
3,000,000
P1,200,000
1,800,000
1,600,000
2,500,000
The 2015 current tax rate is 30% while the 2016 and future tax rate is 40%.
Required: Based on the result of your audit, determine the following:
1. Total Income Tax Expense for the year ended December 31, 2015
_2. Current Tax Expense for the year ended December 31, 2015
_3. Net Deferred Tax Expense for the year ended December 31, 2015
_4. Deferred Tax Liability as of December 31, 2015
5. Deferred Tax Asset as of December 31, 2015
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