Reference no: EM132893614
Question - ABC Company reported pretax financial income of P6,500,000 and P8,200,000 for years 2019 and 2020, respectively. The tax bases for its asset and liabilities on December 31, 2019 and December 31,2020 were equal to their carrying values except for the property, plant and equipment and provision for warranty. Equipment costing P 4,000,000 with estimated residual value of P 400,000 and estimated useful life of 8 years was acquired on January 1, 2019. This asset was depreciated using the straight-line method for financial reporting purposes and sum of the years digits method for tax purposes.
For year 2019 and 2020, the company recorded warranty expense in its books amounting to P 325,000 and P 430,000, respectively. However, actual warranty expenditures were posted in accounts amounting to P 290,000 and P 330,000, for year 2019 and 2020. There no temporary differences during the 2 year period. Income tax rate for all years is 30%.
Required -
-How much is the profit for the year 2019?
-How much is the taxable amount for year 2019?
-How much was the deferred tax asset at December 31, 2020?
-How much was the deferred tax asset at December 31, 2019?
-How much was the deferred tax liability at December 31, 2020?
-How much is the taxable amount for year 2020?
-How much was the deferred tax liability at December 31, 2019?
-How much is the profit for the year 2020?
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