Gaña, Jayson M.A-531 Deferred Tax (NFJPIA – MOCKBOARD 2011) 1. The following facts relate to Whammy Corporation for the year 2010: • Deferred tax liability, January 1, P48,000 • Deferred tax asset, January 1, P16,000. • Taxable income for the year, P430,000. • Cumulative temporary difference at December 31, giving rise to future taxable amounts, P230,000. • Cumulative temporary difference at December 31, giving rise to the future deductible amounts, P95,000. • Tax rate for all years, 35%. No permanent differences exist. The company is expected to operate profitably in the future. What is the total tax expense?. Solution: 15050 0 Current Tax(430000 x 35%) Inc. In DTL 32500 Inc. In DTA 17250 Total tax expense 15250 16575 0 (Practical Accounting 1 – Mockboard) 2. Mayen Company reported total tax expense of P2,000,000 in its 2012 statement of comprehensive income. The following changes in Mayen’s tax assets and liabilities re available: December 31, 2012 2011 Deferred tax asset Income tax payable Deferred tax liability 150,000 300,000 250,000 December 31, 350,000 600,000 500,000 The deferred tax liability was caused by accelerated depreciation and the deferred tax asset is for rentals received in advances. What is the current tax expense for 2012? Solution: Current Tax(430000 x 35%) Change In DTL 200,000.00 Change In DTA 250,000.00 2,050,000 .00 (50,000.0 squee ze January 1.000 .0) Total tax expense 2. Hedonistic received dividends of P500. If JP expects that the company will be liable to MCIT next year. It is the first time that JP will be paying MCIT after operating for 7 years.200.000 3. deferred tax asset to be recognized on the balance sheet for the year will be ? Solution: ----. The RCIT rate is 30% while MCIT rate is 2%. operations resulted to regular corporate income tax (RCIT) amounting to P25.000.000 (NFJPIA 2013 – Mockboard) 4. The entity has a 30% tax rate. What was the taxable income for 2011? Solution: Taxable income (1.000 from its investments in domestic corporation.650.350.000. P120. The following information was taken from Hedonistic Corporation’s 2011 income statements: Income before income taxes 5.000.000.000 Hedonistic’ first year of operations was in 2011.000. 2014.000 .000 / 30%) P4. with the minimum corporate income tax (MCIT) computed at P100. P510. 2014. Also during the year.00 3.000 and taxable temporary differences of P700.000 150.000 Income tax expense: Current Deferred Net income 1. P2.0 -----(2015 National Mockboard) 5.200. The following facts relate to MJ Company Deferred tax liability.000: Deferred tax asset.000 Pretax financial income for 2014.000.000. The JP Inc.000 1. No other differences existed between accounting income and taxable income. The deferred tax expense is the net total of deductible temporary differences of P200. January 1. Assume that at the end of 2015 the accumulated temporary difference related to future years is P550. Non-taxable revenues. end (510.000 (auditing problems – roque) Isay Inc.000 x 35%) P140.100.100. Dec. 7. Tax rate is 30%.000 was a temporary difference related to a current asset.000 . At the end of the first year of operation Isay reported P 7.000 x 30%) P330.000 x 30%) P153. P210. Dec. 31. what is the adjustment in DTL? Solution: (7) DTL. 2014.000.000 x 30%) 180. At the reporting date. giving rise to future deductible amounts. What is the adjustment on the DTL at the end of 2015? 8.000.000.000 Cumulative difference at December 31.400.000.000 (8) DTL. 2014. respectively.2014(600. but will be taxable when the gain is realized on the repayment of the loan.000 Inc. in DTL P150. 31. P510.000 DTL. the accumulated temporary difference related to future years is P1.000 taxable income on its tax return. Jason Company has taken out a foreign loan of $100. the carrying value of the loan is P4. 2014 is Solution: DTA.000 (2015 Regional Mockboard) 6.800. P340.000.500. began operating on January 1.000 Cumulative difference at December 31. Non-deductible expenses. 2015(550. The unrealized exchange gain of P400.000 Tax rate for current and future years 30% The deferred tax asset on December 31. 2014. 31.000 that is recorded at P4.460.000 x 30%) P165.000 income before income taxes on its income statement but only P700.000 difference revealed that P 6200000 was a permanent difference and P 600. P1.000 is included in profit or loss. 2015(1. Analysis of the P 6. giving rise to future taxable amounts. At the end of 2015.000. Dec. what amount of deferred tax liability should the company recognize? Solution: DTL (400. If the current and future tax rates are 34% and 35%. 400. 2014 the company has a cumulative temporary difference due to depreciable property of P2.000 (12) taxable income Difference in Depreciation Difference from Litigation Pre-tax income (13) Pretax Income Income tax expense(720000+450000) Net Income P2. 2014.000 P3. 31.000 cumulative temporary difference is to result in taxable amounts in the future of equal amounts from 2015 to 2019. This balance represents amounts that have been charged to income but are not tax deductible until they are paid. Taxable income for 2014 is P2.Net income Solution: (9)DTL (480000x5x30%) P720. has the ff.000 (1.2014(600.000. DTL 10. differences between the carrying value and tax base of its of its assets and liabilities at the end of 2014: .000 (900.000 Dec.000) At Dec.000 at 2017. Tax rate is 30%. At Dec.000) P2.DTA 11. 31. The company uses different depreciation method for financila reporting and tax purposes.900.Current income tax payable 12. in DTL (P15.400.Pre-tax accounting income 13.000) P3.400.900. 31. the company expects to report taxable income for the next five years. Solve for the follwing for December 31.730. the company has a P900000 liability reported for estimated litifation claims.000 2. 2014: 9.000 x 30%) 180.400.000 (10)DTA(900000x30%) P270.400. P690000 at 2018 and P60000 at 2019. in its first year of operations.170.000. No temporary difference existed at the end of 2013.000 (11)Income tax payable(2400000x30%) P720. The company epects to pay the claims and thus have a tax deductible in the future by P150. Dec.000 YOURWORTHIT INC.DTL. This P2. P60. While difference in equipment will be taxable by P40. (1040000 x 30%) P312. amount in Dec. 2014 Galaga has four temporary difference: Temporary Future taxable(deductable) Amounts Difference 2014 2015 Later year 1.000 36.000) 3.Total Income Tax Solution: (14) DTL (240000 x 30%) (15) DTA (400000 x 30%) (16) Current tax exp.000 for 2014.DTL 15.000) At Dec. 31. Installment sales 276. 31. Galaga Corp.000. Compute the ff.000 P220. Tax rate is 30% Compute the ff.DTA .000 (17) Current tax exp. Accrued expenses (90. Tax rate is 30%.000 Tax Base P680.000 Assume income tax of P435.000 DTL DTA Income tax expense P228.040. Difference in depreciation for P160.2016 and 2017 respectively. P312.000 210.000 Total (P34000) P430. Rent collected in advance (380.Equipment Estimated warranty liability Carrying value P800.000 P760. 31.DTA 16.000 -0- Warranty liability is expected to be settled in 2015.000 (120. 2013.000 in 2015.000 accounting and tax purposes 2.000 P120. At december 31. The company incurred P1. had a temporary difference (related to depreciation) and reported a related deferred tax liability of P60. P20.000 taxable income. in Dec. 2014: 14. Installment receivable collctible in 2016 is classified as non-current.000 P36.Current tax expense 17.000 400. 2014: 18.000) 4.000 P760.000 on its statment of financial position.000. an increase in thedeferred tax asset account of P35.000 Excess Depreciation 940.000 Pretax Accounting Income P2.800 (20) Taxable Inc.e.325. The tax rate for 2010 and all future years was 40%. balance sheet? 24..000 in income before income tax for book purposes in 2010.000 (380.990. balance sheet? 23.450.Income tax expense reported on the income statement would be? Solution: (22) DTL (30000 x 40%) (23)Current tax ((350000-30000) x 40%) P128.000 Excess Rent Excess Expenses Excess Income 486.406.220 . The tax depreciation exceeded its book depreciation by P30. and an income tax payable liability as per the 2009 income tax return of P398. current tax expense) should Smith report in its December 31. (435000/30%) P1. itsfirst year of operation.000 (24)Total Expense(128000+12000) P12. Assume depreciation expense is the only temporary difference. 2010.000) (90.What amount of income taxes payable (i.000 (21)Net Income (2406000-(427800+286800)) P1.What amount of deferred income tax liability should Smith report in its December 31.000 25.19.During 2009.555.000) (Practice Problems-Income Tax Accounting) Smith Company reported P350. 22.200 P141. a company reported an increase in the deferred tax liability account of P77. What is the income tax expense to be reported on the income statement for the year ending December 31.684. 2009? Solution: Income tax Expense (398555+77990-35325) P441. 2010.DTL 20.Net Income Solution: (18)DTA ( 470000 x 30%) (19)DTL ( 1626000 x 30%) P487.000 P140.Pretax accounting income 21.000.