On Jan. 1, 2020, Heat Company reported a deferred tax liability of Php1,000,000 and a deferred tax asset of Php400,000. On Dec. 31, 2020, the entity reported a deferred tax liability of Php1,500,000 and a deferred tax asset of zero.

On Jan. 1, 2020, Heat Company reported a deferred tax liability of Php1,000,000 and a deferred tax asset of Php400,000. On Dec. 31, 2020, the entity reported a deferred tax liability of Php1,500,000 and a deferred tax asset of zero.

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter14: Taxes On The Financial Statements

Section: Chapter Questions

Problem 24CE

See similar textbooks

Related questions

Q: Explain how a change in tax rates affects the measurement of deferred tax amounts.

A: Deferred Tax Asset Items on a company's balance sheet that may be used to reduce taxable income in…

Q: PROBLEM 23: The records of Santiago were destroyed by fire at the end of the current year. However,…

A: Income Statement:- The income statement is defined as the financial statement that explains revenues…

Q: Pampie Company reported in the income statement for the current year pretax income of Php400,000.…

A: Tax expense is the amount of tax that the entity has paid on its taxable income.

Q: 2021? 3. What is the current income tax payable at Decem

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: FUTA TAX MUST BE DEPOSITED WHEN THE CUMULATIVE QUARTERLY TAX LIABILITY EXCEEDS?

A: FUTA (Federal unemployment tax) Tax is required to be paid by an employer for the first $7000 wages…

Q: EL Co. reported net income for the current year 2021 at P560,000 before provision of income tax…

A: Deferred tax asset is the amount that represents the overpayment or the advance payment of tax, the…

Q: T Company reports the following revenues and expenses in its pretax financial income for the year…

A: Taxable Income: It is the income earned by the company as per income tax laws. Deferred Tax: It…

Q: In 2020, R and R Company received an advance payment of Php1,000,000, which was subject to tax but…

A: Deferred tax refers to the difference in the income as per company and as per income tax. These…

Q: An entity reported pretax accounting income of P5,000,000 for the current year. The taxable income…

A: Solution: Total income tax expense for the current year = pretax accounting income * tax rate

Q: What is the total deferred tax liability at December 31, 20x6? 2. What is the total deferred tax…

A: Step 1 Deferred tax is the tax which is the arises due to difference in between the accounting…

Q: In computing the change in deferred tax accounts, which tax rates are used? O A. Current tax rates…

A: SOLUTION- DEFERRED TAX LIABILITY AS BEING THE AMOUNT OF INCOME TAX PAYABLE IN FUTURE PERIODS IN…

Q: In computing the deferred tax asset or liability, w. tax rate is used? a. Current tax rate b.…

A: Deferred tax asset or liability arises due to temporary differences

Q: EL Co. reported net income for the current year 2021 at P560,000 before provision of income tax…

A: Particulars Amount Accounting income per book P560000 Permanent differences :…

Q: Warriors Company reported taxable income of Php8,000,000 in the income tax return for the first year…

A: The correct answer for the above mentioned question is given in the following steps for your…

Q: How are deffered tax adjustments recorderd in the profit and loss account?

A: The objective of this question is to understand how deferred tax adjustments are recorded in the…

Q: What formula is used to “gross-up” supplementalpayments in order to cover the taxes on the…

A: The term "gross-up payroll" indicates a rise in basic pay that is done on purpose in order to lower…

Q: What is the effect of deferred tax asset and deferred tax liability on the current year’s income tax…

A: Deferred tax assets and deferred tax liability arises because of the timing differences of the…

Q: Why deferred tax rate assets and liabilities are recorded in balance sheet?

A: The reasons for the recognition and reporting of deferred tax assets are as follows: The following…

Q: What is deferred income tax expense?

A: Tax: Tax refers to a compulsory payment or a contribution to the state revenue, levied by the…

Q: Question 6 Use this chart for 6-8. William eams $20,940 annually as an accountant. He is married and…

A: The answer for the multiple choice question and relevant explanation are presented hereunder. The…

Concept explainers

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.

Question

*see attached problem

REQUIRED:

What is the net deferred tax expense for the current year?

On Jan. 1, 2020, Heat Company reported a deferred tax liability of Php1,000,000
and a deferred tax asset of Php400,000. On Dec. 31, 2020, the entity reported
a deferred tax liability of Php1,500,000 and a deferred tax asset of zero.

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.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Prior to and during 2019, Shadrach Company reported tax depreciation at an amount higher than the amount of financial depreciation, resulting in a book value of the depreciable assets of 24,500 for financial reporting purposes and of 20,000 for tax purposes at the end of 2019. In addition, Shadrach recognized a 3,500 estimated liability for legal expenses in the financial statements during 2019; it expects to pay this liability (and deduct it for tax purposes) in 2023. The current tax rate is 30%, no change in the tax rate has been enacted, and the company expects to be profitable in future years. What is the amount of the net deferred tax liability at the end of 2019? a. 300 b. 450 c. 1,050 d. 1,350
At 30 June 2019, Beta Ltd had the following deferred tax balances:Deferred tax liability $18,000 Deferred tax asset 15,000Beta Ltd recorded a profit before tax of $80,000 for the year to 30 June 2020, which included the following items:Depreciation expense – plant $7,000 Doubtful debts expense 3,000 Long-service leave expense 4,000For taxation purposes the following amounts are allowable deductions for the year to 30 June 2020:Tax depreciation – plant $8,000 Bad debts written off 2,000Depreciation rates for taxation purposes are higher than for accounting purposes. A corporate tax rate of 30% applies. Required a) Prepare the necessary journal entries to account for income tax assuming recognition criteria are satisfied. b) What are the balances of the deferred tax liability and deferred tax asset at 30 June 2020?
The following information was extracted from the records of Gin Gin Ltd for the year ended 30 June 2021. Additional information The accumulated tax depreciation for machines at 30 June 2021 was $50 000. The tax rate is 30%. Required Prepare a deferred tax worksheet to identify the temporary differences arising in respect of the assets and liabilities in the statement of financial position, and to calculate the balance of the deferred tax liability and deferred tax asset accounts at 30 June 2021. Assume the opening balances of the deferred tax accounts were $2,000 for Deferred Tax Assets and $1,500 for Deferred Tax Liability. Prepare the journal entry to adjust the deferred tax account.
A company's trial balance at 31 December 2021 shows a debit balance of GHS700,000 on current tax and a credit balance of GHS8,400,000 on deferred The directors have estimated the provision for income tax for the year at GHS4.5m and the required deferred tax provision is GHS5.6m, GHS1.2m of which relates to a property revaluation. What is the profit or loss income tax charge for the year ended 31 December 2021?
M
For the year 2020, Tonkatsu Company reported income tax expense of P110,000. Income tax payable at the end of 2019 was P90,000 and at the end of 2020 was P100,000. The deferred tax liability that resulted from the use of accelerated depreciation for tax purposes and the straight-line method for financial reporting purposes increased from P105,000 at the beginning of 2020 to P130,000 at the end of 2020. How much cash was paid for income taxes during the year?
Marigold Company reports pretax financial income of $72,000 for 2020. The following items cause taxable income to be different than pretax financial income. 1. Depreciation on the tax return is greater than depreciation on the income statement by $14,700.2. Rent collected on the tax return is greater than rent recognized on the income statement by $24,200.3. Fines for pollution appear as an expense of $11,900 on the income statement. Marigold’s tax rate is 30% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes at the beginning of 2020 Compute taxable income and income taxes payable for 2020. Taxable income? Income taxes payable? Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020.? Prepare the income tax expense section of the income statement for 2020, beginning with the line “Income before income taxes.
For the year ended December 31, 2021, Jocelyn Company reported pretax financial income of P7,500,000. The taxable income was P6,500,000. The difference is due to accelerated depreciation for income tax purposes. The income tax rate is 30% and the entity made estimated tax payment of P900,000 during the current year. What amount should be reported as current tax expense for the current year? O 1,050,000 O 1,950,000 O 2,250,000 O 1,350,000
p
Headland Corporation began operations in 2020 and reported pretax financial income of $226,000 for the year. Headland’s tax depreciation exceeded its book depreciation by $39,000. Headland’s tax rate for 2020 and years thereafter is 30%. In its December 31, 2020, balance sheet, what amount of deferred tax liability should be reported?
EL Co. reported net income for the current year 2021 at ₱560,000 before provision of income tax during theyear. To compute the provision for income tax, the following data are provided:• Tax depreciation in excess of financial statement amount - ₱ 36,500• Interest income received - ₱ 80,500• Rent received in advance - ₱ 175,000• Dividend income - ₱ 91,700• Estimated tax payment in the current year - ₱ 65,000• Provision for bad debts not yet recognized for tax purposes on the current year - ₱ 48,300• Tax penalties due to late filing on tax return - ₱ 20,000• Corporate tax rate – 30% Required: 14. What is the total income tax expense for the year?15. What is the net income after tax?
At 30 June 2019, ABC Ltd had the following deferred tax balances: Deferred tax liability $18,000 Deferred tax asset 15,000Beta Ltd recorded a profit before tax of $80,000 for the year to 30 June 2020, which included the following items:Depreciation expense – plant Doubtful debts expense Long-service leave expense$7,000 3,000 4,000For taxation purposes the following amounts are allowable deductions for the year to 30 June 2020:Tax depreciation – plant $8,000 Bad debts written off 2,000Depreciation rates for taxation purposes are higher than for accounting purposes. A corporate tax rate of 30% applies.Required:a) Determine the taxable income and income tax payable for the year to 30 June 2020.b) Determine by what amount the balances of the deferred liability and deferred tax asset will increase or decrease for the year to 30 June 2020 because of depreciation, doubtful debts and long-service leave.c) Prepare the necessary journal entries to account for income tax assuming recognition…