for financial reporting purposes, and when installment payments are received for tax purposes. Rona Company recognizes revenue when equipment is sold that are sold on the installment basis. financial reporting purposes and P1,500,000 for tax purposes. Rona Company started to manufacture in 2020 copy machines KOinancial reporting purposes, and when installment 1a 2020, the entity recognized gross profit of P6,000,000 for Enancial reporting purposes and P1,500,000 for tax purposes. The amounts of gross profit expected to be recognized for axpurposes in 2021 and 2022 are P2,500,000 and P2,000,000, respectively. The entity guaranteed the copy machines for two years. Warranty costs are recognized on the accrual basis for financial reporting purposes and when paid for tax purposes. Warranty cost accrued in 2020 is P2,500,000 but only P500,000 of warranty cost is paid in 2020. It is expected that in 2021 and 2022, P1,000,000 and P1,000,000 respectively, of warranty cost will be paid. In addition during 2020, P500,000 interest, net of 20% final income tax, was received and earned. Insurance premium of P100,000 on life insurance policy that covered the life of entity's president was paid. The entity is the beneficiary for this policy. Pretax accounting income in 2020 was P2,000,000. Any 2020 operating loss will be carried forward to 2021. The tax rate is 30%.
for financial reporting purposes, and when installment payments are received for tax purposes. Rona Company recognizes revenue when equipment is sold that are sold on the installment basis. financial reporting purposes and P1,500,000 for tax purposes. Rona Company started to manufacture in 2020 copy machines KOinancial reporting purposes, and when installment 1a 2020, the entity recognized gross profit of P6,000,000 for Enancial reporting purposes and P1,500,000 for tax purposes. The amounts of gross profit expected to be recognized for axpurposes in 2021 and 2022 are P2,500,000 and P2,000,000, respectively. The entity guaranteed the copy machines for two years. Warranty costs are recognized on the accrual basis for financial reporting purposes and when paid for tax purposes. Warranty cost accrued in 2020 is P2,500,000 but only P500,000 of warranty cost is paid in 2020. It is expected that in 2021 and 2022, P1,000,000 and P1,000,000 respectively, of warranty cost will be paid. In addition during 2020, P500,000 interest, net of 20% final income tax, was received and earned. Insurance premium of P100,000 on life insurance policy that covered the life of entity's president was paid. The entity is the beneficiary for this policy. Pretax accounting income in 2020 was P2,000,000. Any 2020 operating loss will be carried forward to 2021. The tax rate is 30%.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 4MC: Prior to and during 2019, Shadrach Company reported tax depreciation at an amount higher than the...
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Transcribed Image Text:What is the deferred tax asset on December 31, 2020
What is the accounting income subject to tar?
a. 2,000,000
b. 1,600,000
c. 2,100,000
d. 1,500,000
a. 870,000
b. 600,000
c. 270,000
d. 480,000
What is the deferred tax liability on December 31.
2020?
a. 1,800,000
b. 1,350,000
c. 1,500,000
d. 1,320,000
Transcribed Image Text:that are sold on the installment basis.
Rona Company started to manufacture in 2020 copy machines
payments are received for tax purposes.
Rona Company recognizes revenue when equipment is sold
for financial reporting purposes, and when installment
financial reporting purposes and P1,500,000 for tax purposes.
Koanancial reporting purposes, and when installment
. 2020, the entity recognized gross profit of P6,000,000 for
Enancial reporting purposes and P1,500,000 for tax purposes.
The amounts of gross profit expected to be recognized for
tax purposes in 2021 and 2022 are P2,500,000 and P2,000,000,
respectively.
The entity guaranteed the copy machines for two years.
Warranty costs are recognized on the accrual basis for
financial reporting purposes and when paid for tax purposes.
Warranty cost accrued in 2020 is P2,500,000 but only P500,000
of warranty cost is paid in 2020.
It is expected that in 2021 and 2022, P1,000,000 and
P1,000,000 respectively, of warranty cost will be paid.
In addition during 2020, P500,000 interest, net of 20% final
income tax, was received and earned.
Insurance premium of P100,000 on life insurance policy that
covered the life of entity's president was paid. The entity is
the beneficiary for this policy.
Pretax accounting income in 2020 was P2,000,000. Any 2020
operating loss will be carried forward to 2021.
The tax rate is 30%.
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