2. How much is the income tax payable to be presented in the statement of financial position at year end? PRANCER Company, at the end of 2021, its first year of operations, prepared a reconciliationbetween pretax financial income and taxable income as follows:Pretax financial incomeEstimated litigation expenseExtra depreciation for taxes750,0001,000,000(1,500,000)250,000Taxable incomeThe estimated litigation expense of P1,000,000 will be deductible in 2023 when it is expected tobe paid. Use of the depreciable assets will result in taxable amounts of P500,000 in each of thenext three years. Estimated tax payments for the year is P35,000. The income tax rate is 30%for all years.

Answered: PRANCER Company, at the end of 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

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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2. How much is the income tax payable to be presented in the statement of financial position at year end?

PRANCER Company, at the end of 2021, its first year of operations, prepared a reconciliation
between pretax financial income and taxable income as follows:
Pretax financial income
Estimated litigation expense
Extra depreciation for taxes
750,000
1,000,000
(1,500,000)
250,000
Taxable income
The estimated litigation expense of P1,000,000 will be deductible in 2023 when it is expected to
be paid. Use of the depreciable assets will result in taxable amounts of P500,000 in each of the
next three years. Estimated tax payments for the year is P35,000. The income tax rate is 30%
for all years.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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