Reference no: EM133106561
Question - Devera Company had the following financial statement elements for which the December 31, 2021 carrying amount is different from the Dec. 31, 2021 tax basis:
|
|
Carrying amount
|
Tax basis
|
Difference
|
|
Equipment
|
P5,500,000
|
P4,000,000
|
P1,500,000
|
|
Accrued liability - health care
|
500,000
|
-
|
500,000
|
|
Computer software cost
|
2,000,000
|
-
|
2,000,000
|
The difference between the carrying amount and tax basis of the equipment is due to accelerated depreciation for tax purposes.
The accrued liability is the estimated health care cost that was recognized as expense in 2021 but deductible for tax purposes when actually paid.
In January 2021, the entity incurred P3,000,000 of computer software cost. Considering the technical feasibility of the project, this cost was capitalized and amortized over 3 years for accounting purposes. However, the total amount was expensed in 2021 for tax purposes.
The pretax accounting income for 2021 is P15,000,000. The income tax rate is 30% and there are no deferred taxes on January 1, 2021.
Required -
1. What amount should be reported as current tax expense for 2021?
a. P5,400,000
b. P5,700,000
c. P3,300,000
d. P3,600,000
2. What amount should be reported as total tax expense for 2021?
a. P4,950,000
b. P4,500,000
c. P4,050,000
d. P3,900,000
3. What amount should be reported as deferred tax liability on December 31, 2021?
a. P1,050,000
b. P1,200,000
c. P900,000
d. P150,000
4. What amount should be reported as deferred tax asset on December 31, 2021?
a. P0
b. P600,000
c. P150,000
d. P750,000