Reference no: EM133171538
Question - Aloha Company provided the following information on December 31, 2019:
|
|
Carrying amount
|
Tax base
|
|
Accounts receivable
|
1,500,000
|
1,750,000
|
|
Motor vehicle
|
1,650,000
|
1,250,000
|
|
Provision for warranty
|
120,000
|
0
|
|
Deposits received in advance
|
150,000
|
0
|
The depreciation rates for accounting and taxation are 15% and 25%, respectively. The deposits are taxable when received and warranty costs are deductible when paid. An allowance for doubtful accounts of P250,000 has been raised against accounts receivable for accounting purposes but such accounts are deductible only when written off as uncollectible. The entity showed net income of P8,000,000 in the income statement for 2019. The income tax rate is 30%. There are no temporary differences at the beginning of the current year.
Required -
1. Determine the accounting income subject to tax.
2. Determine the taxable income.
3. Determine the current tax expense.
4. Determine the deferred tax asset, deferred tax liability, net deferred tax expense or benefit.
5. Determine the total income tax expense.
6. Determine the net income.
7. Prepare journal entries.