Problem 2:

Luzon Corporation has one temporary difference at the end of 2024 that will reverse and cause
taxable amounts of P 550,000 in 2025, P 600,000 in 2026, and P 650,000 in 2027. Luzon’s
pretax financial income for 2024 is P 3,000,000, and the tax rate is 30% for all years. There are
no deferred tax asset and deferred tax liability at the beginning of 2024.

Required:
a. Compute the taxable income and income tax expense-current for 2024. Compute also
the deferred tax liability at December 31, 2024.
b. Prepare journal entries to record income tax expense for 2024.