Taxable Income: Income which is earned over and above the permissible limit is considered as Taxable income. In other words, earnings that is eligible for tax computation after allowing or deducting eligible legal deductions is termed as taxable income. Deferred tax asset : The process of paying over and above the required level of tax is termed as deferred tax asset. These taxes are calculated and paid on the future expected income. In case if the future expected inflow of cash reduces then the company can claim the excess tax paid in the form of tax relief or refund. Deferred tax liability : Some business activities may create dissimilarity in the amount recorded in the books and the taxable income. Those differences create deferred tax liability. For example, Mr.J is a car dealer who sold a car on installment. In actual the sale happened in the current year but the benefits are receivable in the future years. This creates a difference in the books of accounts and the taxable account. (a) To determine and record the income tax expenses for 4 years.

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Chapter 19, Problem 2P

To determine

Taxable Income: Income which is earned over and above the permissible limit is considered as Taxable income. In other words, earnings that is eligible for tax computation after allowing or deducting eligible legal deductions is termed as taxable income.

Deferred tax asset: The process of paying over and above the required level of tax is termed as deferred tax asset. These taxes are calculated and paid on the future expected income. In case if the future expected inflow of cash reduces then the company can claim the excess tax paid in the form of tax relief or refund.

Deferred tax liability: Some business activities may create dissimilarity in the amount recorded in the books and the taxable income. Those differences create deferred tax liability. For example, Mr.J is a car dealer who sold a car on installment. In actual the sale happened in the current year but the benefits are receivable in the future years. This creates a difference in the books of accounts and the taxable account.

(a)

To determine and record the income tax expenses for 4 years.

To determine

(b)

To determine the net income for the year 2018.

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