Problem A

(1) Motor Vehicle:

CA 1,650,000
TB 1,250,000
Taxable temp. diff. 400,000

DTL (30% x 400,000) 120,000

(2) CA TB Deductible Temporary

AR 1,500,000 1,750,000 250,000
Warranty 120,000 - 120,000
Deposits 150,000 - 150,000
Total deductible temp diff. 520,000

DTA (30% x 520,000) 156,000

(3) Tax expense fr increase in DTL 120,000

Tax benefit fr increase in DTA 156,000
Net deferred tax benefit (36,000)

(4) Financial income 8,000,000

Taxable temporary diff (400,000)
Deductible temporary diff 520,000
Taxable income 8,120,000

CTE (30% x 8,120,000) 2,436,000

(5) Current tax expense 2,436,000

Net deferred tax benefit (36,000)
Total income tax expense 2,400,000

Or
Acctg income subject to tax x 30%
(8,000,000 x 30%) 2,400,000

Problem B
(6) Pretax income 4,500,000
Premiums on officers' life insurance 120,000
Acctg. Income subj to tax 4,620,000
Warranty expense 160,000
Revenue fr installment sales (600,000)
Taxable income 4,180,000

CTE (30% x 4,180,000) 1,254,000

Problem C

(7) Total income tax exp (6M x 30%) 1,800,000

*Acctg inc subj to tax is equal to pretax financial
income in this case because there is no PD.

Problem D

(8) Income tax payable 520,000

DTA (800k end- 600k beg) ( 200,000 )
Total income tax expense 320,000

Problem E

(9) None or Zero

Problem F
(10) Equipment - diff 400,000

Problem
G

(1
1) 437,500

Problem H
(12) Pretax financial income for 2019 400,000
Deductible amounts:
2020 100,000
2021 130,000
2022 80,000
Taxable income 710,000
 CTE (30% x 710,000) 213,000

Problem I
(13) Taxable income 8,000,000
Excess tax depreciation 800,000
Estimated product claim liability (1,200,000)
Installment sales 2,600,000
Acctg. Income subj to tax 10,200,000

Total income tax expense (30% x 10.2M) 3,060,000

(14) Accrued for product liability 1,200,000

DTA (30% x 1,200,000) 360,000

(15) Tax depn in excess of book depreciation 800,000

Reported installment sales income in
excess of taxable installment sales income 2,600,000
3,400,000

DTL (30% x 3,400,000) 1,020,000

Problem J
(16) Acctg income 2,000,000
PD-interest (50,000)
Acctg income subj to tax 1,950,000
TD-Rent exp 200,000
TD-Depn exp (300,000)
Taxable income 1,850,000
30%
555,000
OR

Financial Taxation
NI b4 2,650,000 2,650,000
Depreciation (500,000) (800,000)
Rent exp (200,000) -
Total 1,950,000 1,850,000
Interest on govt bonds 50,000 -
2,000,000 1,850,000

(1,850,000 x 30%) 555,000

Problem K
(17) Rental income-financial (accrual basis) 300,000
Rental income-tax (cash basis) 600,000
Future deductible amount (300,000)
Tax rate 30%
 90,000

(18) CA of the liability (Unearned Portion) as of 12/31/19 300,000

Less: tax base -
Future taxable amount 300,000
Tax rate 30%
DTA 90,000

Problem L

(19) 400,000
(20) None or Zero
400,000 x 35% =140,000 DTL

Problem
M

(2
1) 190,000

(22
) Statement of Financial Position Approach
Prepaid Insurance-Dec 31, 2019 190,000
Less: tax base -
Future taxable amount 190,000
tax rate 30%
DTL 57,000

Inc Statement Approach

Ins. Exp.-Accrual 190,000
Ins Exp.- Tax 380,000
Future taxable amount 190,000
tax rate 30%
DTL 57,000

Problem N
(23) None or Zero
*Given: Permanent differences

Problem O
(24) CTE (3,750,000 x 30%) 1,125,000
 Problem P
(25) Taxable income 829,000
Tax depreciation 80,000
Accrual for product liability (125,000)
Installment sales 265,000
Financial income before timing diff or TD 1,049,000

(1,049,000 x 30%) 314,700

Problem Q
(26) (1,800,000 - 1,125,000) 675,000
675,000 x 30% 202,500 DTA

Problem R
(27) Royalties-financial 400,000
Royalties- taxation 600,000
excess revenue 200,000
tax rate 30%
DTA 60,000

(28) Unearned royalties as of 12/31/2019 200,000

Less: tax base -
deductible temporary difference 200,000
tax rate 30%
DTA 60,000

Problem S
(29) DTA, end (350,000 x 30%) 105,000
DTA, beg -
Tax benefit 105,000

DTL, end (2,400,000 x 30%) 720,000

DTL, beg 400,000
Deferred tax expense 320,000

Deferred tax expense 320,000

Deferred tax benefit 105,000
Deferred tax expense, net 215,000

Problem T
(30) Cumulative future taxable amount 2,200,000
Less: prior year taxable amount (864,000/ 30%) 2,880,000
decrease in future taxable amount 680,000

Cumulative future deductible amount 1,000,000

Less: prior year deductible amount (576,000/30%) 1,920,000
decrease in deductible amount 920,000

Taxable income 2,500,000

dec in deductible amount -2019 920,000
dec in future taxable amount-2019 (680,000)
Pretax financial income 2,740,000