nancial income P400,000 Estimated litigation expense 1,000,000 Installment sales (800,000) Taxable income P600,000 The estimated litigation expenses of P1,000,000 will be deductible in 2023 when it is expected to be paid. The gross profit from installment sales will be realized in the amount of P500,000 and P300,000 each of the next two years. The income tax rate is 30% in current year and 32% in 2023 and 33% in 2024 were enacted for future years. TRUE OR FALSE
Sarsuela Co. at the end of 2022, its first year of operation, prepared reconciliation between pretax financial income and taxable income as follows:
|
Pretax financial income |
P400,000 |
|
Estimated litigation expense |
1,000,000 |
|
Installment sales |
(800,000) |
|
Taxable income |
P600,000 |
The estimated litigation expenses of P1,000,000 will be deductible in 2023 when it is expected to be paid. The gross profit from installment sales will be realized in the amount of P500,000 and P300,000 each of the next two years. The income tax rate is 30% in current year and 32% in 2023 and 33% in 2024 were enacted for future years.
TRUE OR FALSE
Statement 1: The net income after tax for the period ending December 31, 2022 is P660,000.
Statement 2: Total income tax expense for the period ending December 31, 2022 is P120,000
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
