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Make the journal entry to adjust the deferred tax liability

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Reference no: EM132805933

Pressman, Inc started his operations on January 1, 2019. At the end of the first year of operations, the company reported P7, 500,000 income before income taxes on its statement but only P700, 000 taxable income on its tax return. Analysis of the P6, 800,000 difference revealed that P6, 200,000 was a temporary difference and P600,000 was a permanent difference related to a current asset. At the end of 2020, the accumulated temporary tax liability difference related to future years is P1, 100,000. The enacted tax rate is 30% for 2019 and 2020.

Requirements:

Problem a. what is the journal entry to adjust the deferred tax liability at the end of 2020.

Problem b. Assume that at the end of 2020, the accumulated temporary tax liability difference related to future years is P550, 000. Prepare the journal entry to adjust the deferred tax liability at the end of 2020.

Reference no: EM132805933

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