Amazing Company enjoys a profitable operation for its past ten years of existence. The company president proposed to the Board of Directors an incentive compensation plan where the general managers would be entitled to a year-end bonus, to be paid on January 15 of the following year, under the following schemes based on their department performance: General Manager 1 – 3% bonus based on profit before bonus and income tax in excess of P5,000,000. General Manager 2 – 2% bonus based on profit after both bonus and income tax. General Manager 3 – 1% bonus based on profit after bonus but before income tax. The company’s profit before bonus and income tax for the year ended December 31, 2021 is P8,000,000. The income tax rate is 25%. How much is the total liability related to the above transactions to be reported on December 31, 2021?
Amazing Company enjoys a profitable operation for its past ten years of existence. The company president proposed to the Board of Directors an incentive compensation plan where the general managers would be entitled to a year-end bonus, to be paid on January 15 of the following year, under the following schemes based on their department performance: General Manager 1 – 3% bonus based on profit before bonus and income tax in excess of P5,000,000. General Manager 2 – 2% bonus based on profit after both bonus and income tax. General Manager 3 – 1% bonus based on profit after bonus but before income tax. The company’s profit before bonus and income tax for the year ended December 31, 2021 is P8,000,000. The income tax rate is 25%. How much is the total liability related to the above transactions to be reported on December 31, 2021?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter9: Current Liabilities And Contingent Obligations
Section: Chapter Questions
Problem 8RE: Borat Company gives annual bonuses after the end of the year. Borat computes the bonuses based on...
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Amazing Company enjoys a profitable operation for its past ten years of existence. The company president proposed to the Board of Directors an incentive compensation plan where the general managers would be entitled to a year-end bonus, to be paid on January 15 of the following year, under the following schemes based on their department performance:
- General Manager 1 – 3% bonus based on profit before bonus and income tax in excess of P5,000,000.
- General Manager 2 – 2% bonus based on profit after both bonus and income tax.
- General Manager 3 – 1% bonus based on profit after bonus but before income tax.
The company’s profit before bonus and income tax for the year ended December 31, 2021 is P8,000,000. The income tax rate is 25%.
How much is the total liability related to the above transactions to be reported on December 31, 2021?
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