T Company reports the following revenues and expenses in its pretax financial income for the year ended December 31, 2003: Revenues Expenses Pretax financial income P229,600 (160,100) P 69,500 The revenues included in pretax financial income are the same amount as the revenues included in the company's taxable income. A reconciliation of the expenses reported for pretax financial income to the expenses reported for taxable income, however, reveals four differences: a. Depreciation deducted for financial reporting exceeded depreciation deducted for income taxes by P11,000. b. Percentage depletion deduction for income taxes exceeded depletion deducted for financial reporting by P15,600. c. Warranty costs deducted for income taxes exceeded warranty expenses deducted for financial reporting by P8,900. d. Legal expense of P9,800 was deducted for financial reporting, it will be deducted for income taxes when paid in a future year. The company expenses its percentage depletion to exceed its cost depletion in each of the next 5 years by the same amount as in 2000. At the end of 2000, the other three expenses are expected to result in total future taxable or deductible amounts as follows: Totals Future taxable amounts Depreciation expense difference Future deductible amounts Warranty expense difference Legal expense difference P63,000 48,400 9,800 At the beginning of 2003, the company had a deferred tax liability of P22,200 related to the depreciation difference and a deferred tax asset of P17,190 related to the warranty difference. The income tax rate for 2003 is 35%, but in 2002 Congress enacted a 30% rate for 2004 and thereafter.
T Company reports the following revenues and expenses in its pretax financial income for the year ended December 31, 2003: Revenues Expenses Pretax financial income P229,600 (160,100) P 69,500 The revenues included in pretax financial income are the same amount as the revenues included in the company's taxable income. A reconciliation of the expenses reported for pretax financial income to the expenses reported for taxable income, however, reveals four differences: a. Depreciation deducted for financial reporting exceeded depreciation deducted for income taxes by P11,000. b. Percentage depletion deduction for income taxes exceeded depletion deducted for financial reporting by P15,600. c. Warranty costs deducted for income taxes exceeded warranty expenses deducted for financial reporting by P8,900. d. Legal expense of P9,800 was deducted for financial reporting, it will be deducted for income taxes when paid in a future year. The company expenses its percentage depletion to exceed its cost depletion in each of the next 5 years by the same amount as in 2000. At the end of 2000, the other three expenses are expected to result in total future taxable or deductible amounts as follows: Totals Future taxable amounts Depreciation expense difference Future deductible amounts Warranty expense difference Legal expense difference P63,000 48,400 9,800 At the beginning of 2003, the company had a deferred tax liability of P22,200 related to the depreciation difference and a deferred tax asset of P17,190 related to the warranty difference. The income tax rate for 2003 is 35%, but in 2002 Congress enacted a 30% rate for 2004 and thereafter.
Chapter17: Corporations: Introduction And Operating Rules
Section: Chapter Questions
Problem 15DQ
Related questions
Question
A. How much is the
B. How much is the
C. How much is the net income after income tax provision at December 31, 2003?
Transcribed Image Text:T Company reports the following revenues and expenses in its pretax financial income for the
year ended December 31, 2003:
Revenues
Expenses
Pretax financial income
P229,600
(160,100)
P 69,500
The revenues included in pretax financial income are the same amount as the revenues
included in the company's taxable income. A reconciliation of the expenses reported for
pretax financial income to the expenses reported for taxable income, however, reveals four
differences:
a. Depreciation deducted for financial reporting exceeded depreciation deducted for income
taxes by P11,000.
b. Percentage depletion deduction for income taxes exceeded depletion deducted for
financial reporting by P15,600.
c. Warranty costs deducted for income taxes exceeded warranty expenses deducted for
financial reporting by P8,900.
d. Legal expense of P9,800 was deducted for financial reporting, it will be deducted for
income taxes when paid in a future year.
The company expenses its percentage depletion to exceed its cost depletion in each of the
next 5 years by the same amount as in 2000. At the end of 2000, the other three expenses
are expected to result in total future taxable or deductible amounts as follows:
Totals
Future taxable amounts
Depreciation expense difference
P63,000
Future deductible amounts
Warranty expense difference
Legal expense difference
48,400
9,800
At the beginning of 2003, the company had a deferred tax liability of P22,200 related to the
depreciation difference and a deferred tax asset of P17,190 related to the warranty
difference. The income tax rate for 2003 is 35%, but in 2002 Congress enacted a 30% rate
for 2004 and thereafter.
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