6. On December 31, 2021, ABC has earned financial income before tax of P3,240,850. The tax rate applicable for the current and future years is 30%. For purposes of determining the taxable income, the following items are considered for analysis and reconciliation:On January 1, 2021, ABC has acquired a depreciable property amounted to P1,000,000. For financial accounting purposes, it uses straight line method to depreciate it and sum of the year’s digit method for income tax purposes (with depreciation rate from year 1 to year 10 of 10/55, 9/55, 8/55, 7/55, 6/55, 5/55, 4/55, 3/55, 2/55, 1/55, respectively). The useful life of the asset is 10 years with no residual value.3 years prepaid rent of P600,000 (P200,000 a year) paid December 31, 2021 that is applicable for the next 3 years starting 2022.Dividend income (received in cash) of P250,000 that is subject to 20% tax rate.Interest income on deposit (already credited to ABC’s deposit account) of P150,000 with 20% applicable tax rate.Revenue receivable (accrued income) of P400,000 expected to be received in full on the year 2022.Tax penalty and surcharges charged by the BIR for the tax assessment applicable to the past tax returns of P780,000.QUESTION:6. Determine the deferred tax liability.

Depreciation under financial accounting as per straight line method =(cost of the asset - salvage…

Answered: December 31, 2021, ABC has earned…

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

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 4MC: Prior to and during 2019, Shadrach Company reported tax depreciation at an amount higher than the...

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On December 31, 2021, ABC has earned financial income before tax of P3,240,850. The tax rate applicable for the current and future years is 30%. For purposes of determining the taxable income, the following items are considered for analysis and reconciliation:

On January 1, 2021, ABC has acquired a depreciable property amounted to P1,000,000. For financial accounting purposes, it uses straight line method to depreciate it and sum of the year’s digit method for income tax purposes (with depreciation rate from year 1 to year 10 of 10/55, 9/55, 8/55, 7/55, 6/55, 5/55, 4/55, 3/55, 2/55, 1/55, respectively). The useful life of the asset is 10 years with no residual value.
3 years prepaid rent of P600,000 (P200,000 a year) paid December 31, 2021 that is applicable for the next 3 years starting 2022.
Dividend income (received in cash) of P250,000 that is subject to 20% tax rate.
Interest income on deposit (already credited to ABC’s deposit account) of P150,000 with 20% applicable tax rate.
Revenue receivable (accrued income) of P400,000 expected to be received in full on the year 2022.
Tax penalty and surcharges charged by the BIR for the tax assessment applicable to the past tax returns of P780,000.

QUESTION:

6. Determine the deferred tax liability.

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