At December 31, 2018 AP Corporation had a deferred tax liability of P250, 000. At December 31, 2019, the deferred tax liability is P420, 000. The corporation’s 2019 current tax expense is P480, 000. What amount should AP report as total 2019 income tax expense?

At December 31, 2018 AP Corporation had a deferred tax liability of P250, 000. At December 31, 2019, the deferred tax liability is P420, 000. The corporation’s 2019 current tax expense is P480, 000. What amount should AP report as total 2019 income tax expense?

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter11: The Corporate Income Tax

Section: Chapter Questions

Problem 1P: Quince Corporation has taxable income of $485,000 for its calendar tax year. Calculate the...

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Question

At December 31, 2018 AP Corporation had a deferred tax liability of P250, 000. At December 31, 2019,
the deferred tax liability is P420, 000. The corporation’s 2019 current tax expense is P480, 000. What
amount should AP report as total 2019 income tax expense?

Definition Definition Estimated future tax made while preparing accounts. Deferred tax is estimated based on past and present transactions from financial statements. It is not the actual tax that needs to be paid or is refundable from the revenue authority; it is an accounting entry. It is necessary to account for deferred tax due to difference between accounting profits and taxable profits.

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