se the PFRS for SMEs) An entity operates in a jurisdiction where income taxes are payable at a lower rate on undistributed profits (20 per cent) with an additional amount (10 per cent) being payable when profits are distributed (i.e., the tax rate on distributed profits is 30 per cent). On 31 December 20X1 the entity expects to propose dividends in March 20X2 of approximately ₱20,000 for the year ended 20X1. The financial statements will be authorized for issue in April 20X2. Taxable profit for 20X1 is ₱100,000. The entity has temporary differences that are expected to increase taxable profit in the future for the year 20X1 of ₱30,000. The entity was formed on 1 January 20X1. On 31 December 20X1 the entity should recognize the following: A current tax liability (and expense) of ₱20,000 and a deferred tax liability (and expense) of ₱6,000. A current tax liability (and expense) of ₱20,000 and a deferred tax liability (and expense) of ₱9,000. A current tax liability (and expense) of ₱22,000 and a deferred tax liability (and expense) of ₱6,000. A current tax liability (and expense) of ₱25,000 and a deferred tax liability (and expense) of ₱7,500. A current tax liability (and expense) of ₱30,000 and a deferred tax liability (and expense) of ₱9,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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(Use the PFRS for SMEs) An entity operates in a jurisdiction where income taxes are payable at a lower rate on undistributed profits (20 per cent) with an additional amount (10 per cent) being payable when profits are distributed (i.e., the tax rate on distributed profits is 30 per cent). On 31 December 20X1 the entity expects to propose dividends in March 20X2 of approximately ₱20,000 for the year ended 20X1. The financial statements will be authorized for issue in April 20X2. Taxable profit for 20X1 is ₱100,000. The entity has temporary differences that are expected to increase taxable profit in the future for the year 20X1 of ₱30,000. The entity was formed on 1 January 20X1. On 31 December 20X1 the entity should recognize the following:

A current tax liability (and expense) of ₱20,000 and a deferred tax liability (and expense) of ₱6,000.
A current tax liability (and expense) of ₱20,000 and a deferred tax liability (and expense) of ₱9,000.
A current tax liability (and expense) of ₱22,000 and a deferred tax liability (and expense) of ₱6,000.
A current tax liability (and expense) of ₱25,000 and a deferred tax liability (and expense) of ₱7,500.
A current tax liability (and expense) of ₱30,000 and a deferred tax liability (and expense) of ₱9,000.

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