The retained earnings of XYZ Corporation is P5,000,000 and its liquidated capital P1,000,000 as of the January 1, 2021. During the year, it extracted 5,000 tons of ore but sold 5,200. The ending inventory is 300 tons. The depletion rate of its wasting asset is P250 per ton. It earned a net income of P1,500,000 during the year but declared P500,000 of dividends. How much is the maximum amount that XYZ Corporation can declare as dividends if the accumulated depletion as of year-end is P2,250,000?

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A:

Q: None

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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.