WhyRU Company usually depreciates its equipment using straight line method for accounting purposes, bu for tax purposes its sum-of-the-years method. WhyRU Company acquired the equipment through purchas amounting to P2,400,000 on January 1,2018. Assume a tax rate of 30%. Useful life is 4 years. WhyRU Company made the following income in its income tax return available through reports for 2018 P800,000; 2019 – P890,0000; 2020 – P1,200,000; 2021 – P1,500,000 There is no other differences betwee WhyRU's accounting income and taxable income for years 2018, 2019, 2020 and 2021 other than for th difference in depreciation for the couinment described

WhyRU Company usually depreciates its equipment using straight line method for accounting purposes, bu for tax purposes its sum-of-the-years method. WhyRU Company acquired the equipment through purchas amounting to P2,400,000 on January 1,2018. Assume a tax rate of 30%. Useful life is 4 years. WhyRU Company made the following income in its income tax return available through reports for 2018 P800,000; 2019 – P890,0000; 2020 – P1,200,000; 2021 – P1,500,000 There is no other differences betwee WhyRU's accounting income and taxable income for years 2018, 2019, 2020 and 2021 other than for th difference in depreciation for the couinment described

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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Computing and Reporting Deferred Income TaxesEarly in January 2019, Oler, Inc., purchased equipment costing $24,000. The equipment had a 2‑year useful life and was depreciated in the amount of $12,000 in 2019 and 2020. Oler deducted the entire $24,000 on its tax return in 2019. This difference was the only one between its tax return and its financial statements. Oler’s income before depreciation expense and income taxes was $354,000 in 2019 and $367,500 in 2020. The tax rate in each year was 25%. Requireda. What amount of deferred tax liability should Oler report in 2019 and 2020? 2019 2020 b. Prepare the journal entries to record income taxes for 2019 and 2020. General Journal Description Debit Credit Income taxes payable To record income taxes for 2019. Income tax expense To record income taxes for 2020. c. Repeat requirement b if in 2019 the U.S. enacts a permanent tax rate change to be effective in…
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