Reference no: EM132752438

Questions -

Q1. For the year ended December 31, 20x1, Mont Co.'s books showed income of P600,000 before provision for income tax expense. To compute taxable income for taxation purposes, the following items should be noted:

Income from exempt municipal bonds P60,000 Depreciation deducted for tax purposes in excess of depreciation recorded on the books 120,000

Proceeds received from life insurance on death of officer 100,000

Estimated tax payments -

Enacted corporate tax rate 30%

What amount should Mont report at December 31, 20x1 as its income tax liability?

Q2. Leer Corporation's pretax income in 20x7 was P100,000. The temporary differences between amounts reported in the financial statements and the tax return are as follows; Depreciation in the financial statements was P8,000 more than the tax depreciation. The equity method of accounting resulting in financial statement income of P35,000. A P25,000 dividend was received during the year, which is eligible for the 80% dividends received deduction. Leer's effective income tax rate was 30% in 20x7. In its 20x7 income statement, Leer should report a current provision for income taxes of __________.

Q3. For the year ended December 31, 20x1, Tyre Co. reported pretax financial statement income of P750,000. Its taxable income was P650,000. The difference is due to accelerated depreciation for income tax purposes. Tyre's effective income tax rate is 30%, and Tyre made estimated tax payments during 20x1 of P90,000. What amount should Tyre report as current tax expense for 20x1?

Q4. On January 2, 20x1, Ross Co. purchased a machine for P70,000. This machine has a 5-year useful life, a residual value of P10,000, and is depreciated using the straight-line method for financial statement purposes. For tax-purposes, depreciation expense was P25,000 for 20x1 and P20,000 for 20x2. Ross' 20x2 income, before income taxes and depreciation expense, was P100,000 and its tax rate was 30%. If Ross had made no estimated tax payments during 20x2, what amount of current income tax liability would Ross report in its December 31, 20x2 balance sheet?

Q5. Scott Corp. received cash of P20,000 that was included in revenues in its 20x4 financial statements , of which P12,000 will not be taxable until 20x5. Scott's enacted tax rate is 30% for 20x4, and 25% for 20x5. What amount should Scott report in its 20x4 balance sheet for deferred income tax liability?

Q6. West Corp. leased a building and received the P36,000 annual rental payment on June 15, 20x9. The beginning of the lease was July 1, 20x9. Rental income is taxable when received. West's tax rate are 30% for 20x9 and 40% thereafter. West had no other permanent or temporary differences. West determined that no valuation allowance was needed. What amount of deferred tax asset should West report in the December 31, 20x9, balance sheet?

Q7. Huff Corp. began operations on January 1, 20x8. Huff recognizes revenues from all sales under the accrual method for financial reporting purposes and appropriately uses the installment method for income tax purposes. Huff's gross margin on installment sales under each method was as follows:

Year	Accrual method	Installment method
20x8	P800,000	P300,000
20x9	1,300,000	700,000

Enacted income tax rates area 30% for 20x9 and 25% thereafter. There are no other temporary differences. In Huff's December 31, 20x9, balance sheet, the deferred income tax liability should be______.

Q8. Stone Co. began operations in 20x1 and reported P225,000 in income before income taxes for the year. Stone's 20x1 tax depreciation exceeded its book depreciation by P25,000. Stone had nondeductible book expenses of P10,000 related to permanent differences. Stone's tax rate for 20x1 was 40%, and the enacted rate for years after 20x1 is 35%. In its December 31, 20x1, balance sheet, what amount of deferred income tax liability should Stone report?