Use the following information for the next two items: With Corporation entered into a lease with Argh Leasing, Inc. for a new equipment on January 1, 2020. The lease stipulates that annuall payments of P1,000,000 will be made for five years starting December 31, 2020. The present value of the lease payments on January 1, 2020 is P3,791,000, discounted using With's incremental borrowing rate of 10%. The equipment is depreciated on a straight- line basis, and will revert to the lessor at the lease expiration. The company is subject to the regular corporate income tax rate of 30%. Based on the information above, answer the following: 1. What amount should be reported as net deferred tax liability (asset) as at December 31, 2020? 2. What amount should be reported as deferred tax expense (income) for the year ended December 31, 2021?

Use the following information for the next two items: With Corporation entered into a lease with Argh Leasing, Inc. for a new equipment on January 1, 2020. The lease stipulates that annuall payments of P1,000,000 will be made for five years starting December 31, 2020. The present value of the lease payments on January 1, 2020 is P3,791,000, discounted using With's incremental borrowing rate of 10%. The equipment is depreciated on a straight- line basis, and will revert to the lessor at the lease expiration. The company is subject to the regular corporate income tax rate of 30%. Based on the information above, answer the following: 1. What amount should be reported as net deferred tax liability (asset) as at December 31, 2020? 2. What amount should be reported as deferred tax expense (income) for the year ended December 31, 2021?

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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