1) Compute for the taxable income2) Compute for the deferred tax asset.3) Compute for the net income after tax (round off to the nearest whole number) NINE Company reported a pre-tax financial income of P8,584,950 for the year ended December31, 2021. The following items were also noted:Insurance premium on life of an officer with NINE Companyas the beneficiaryTax depreciationFinancial depreciation175,000785,900572,150Penalties due to late filing of income tax returns80,650Dividend received348,250Estimated litigation loss accrued for financial accountingpurposes deductible when settled in the futureEstimated doubtful accounts expense275,875197,745Estimated tax paymentsIncome tax rateCash received for rent of which P486,280 will be recognizedas income by the company on the next year500,50035%589,125

Taxable income is the income earned by an individual, firm or company that is eligible to pay taxes…

NINE Company reported a pre-tax financial income of $8,584,950 for the year ended December 31, 2021. The following items were also noted: Insurance premium on life of an officer with NINE Company as the beneficiary P 175,000 Tax depreciation 785,900 Financial depreciation 572,150 Penalties due to late filing of income tax returns 80,650 Dividend received 348,250 Estimated litigation loss accrued for financial accounting purposes deductible when settled in the future 275,875 Estimated doubtful accounts expense 197,745 Estimated tax payments 500,500 Income tax rate 35% Cash received for rent of which 486,280 will be recognized as income by the company on the next year 589,125

NINE Company reported a pre-tax financial income of $8,584,950 for the year ended December 31, 2021. The following items were also noted: Insurance premium on life of an officer with NINE Company as the beneficiary P 175,000 Tax depreciation 785,900 Financial depreciation 572,150 Penalties due to late filing of income tax returns 80,650 Dividend received 348,250 Estimated litigation loss accrued for financial accounting purposes deductible when settled in the future 275,875 Estimated doubtful accounts expense 197,745 Estimated tax payments 500,500 Income tax rate 35% Cash received for rent of which 486,280 will be recognized as income by the company on the next year 589,125

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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Concept explainers

Fringe Benefit Tax

Fringe benefits are in addition to the compensation that companies give to their employees. It is an additional benefit above the stated salary. It helps to keep the employees of the firm motivated as sometimes the only salary is not enough to retain the quality employees of the firm. There are different types of fringe benefits. Fringe benefits are given in both private as well as public enterprises.

Question

1) Compute for the taxable income

2) Compute for the deferred tax asset.

3) Compute for the net income after tax (round off to the nearest whole number)

NINE Company reported a pre-tax financial income of P8,584,950 for the year ended December
31, 2021. The following items were also noted:
Insurance premium on life of an officer with NINE Company
as the beneficiary
Tax depreciation
Financial depreciation
175,000
785,900
572,150
Penalties due to late filing of income tax returns
80,650
Dividend received
348,250
Estimated litigation loss accrued for financial accounting
purposes deductible when settled in the future
Estimated doubtful accounts expense
275,875
197,745
Estimated tax payments
Income tax rate
Cash received for rent of which P486,280 will be recognized
as income by the company on the next year
500,500
35%
589,125

Definition Definition Estimated future tax made while preparing accounts. Deferred tax is estimated based on past and present transactions from financial statements. It is not the actual tax that needs to be paid or is refundable from the revenue authority; it is an accounting entry. It is necessary to account for deferred tax due to difference between accounting profits and taxable profits.

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Step 1: Compute taxable income

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Step 3: Computation of deferred tax asset

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Step 4: Computation of net income after tax

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