CAPADA, Johanna Raissa C.

BSMA 2-1

CHAPTER 4 - INCOME TAXES

PROBLEMS

4-3 LUZON CORPORATION

a Pretax financial income
Future taxable amount (550,000 + 600,000 + 650,000)
Taxable income

Taxable income
Multiplied by income tax rate
Income tax expense - current

Future taxable amount

Multiplied by income tax rate
Deferred tax liability

b Particulars
Income tax expense - current
Income tax expense - deferred
Income tax expense payable
Deferred tax liability

4-4 VISAYAS CORPORATION

a Pretax financial income
Future deductible amount (500,000 + 650,000 + 400,000)
Taxable income

Taxable income
Multiplied by income tax rate
Income tax expense - current

Future deductible amount

Multiplied by income tax rate
Deferred tax asset

b Particulars
Income tax expense - current
Deferred tax asset
 Income tax expense payable
Income tax benefit

4-6 SAMAR CORPORATION

Future deductible amount
Multiplied by income tax rates
Deferred tax asset

Future taxable amount (360,000 +530,000)

Multiplied by income tax rates
Deferred tax liability

Income tax payable

Pretax financial income

Mulitplied by income tax rate
Income tax expense - current

Income tax expense - current

Income tax expense - deferred (267,000 - 72,000)
Total income tax expense

4-7 BOHOL COMPANY

Taxable income
Future deductible amount
Non-taxable income
Pretax financial income

4-8 WALL SERVICES

a Schedule of reversal of the temporary differences
2021 (140,000 x 32%)
2022 (320,000 x 34%)
2023 (240,000 x 36%)
Total

Pretax financial income

Add: Non-deductible expenses
Less: Non-taxable revenues
Financial income subject to tax
Future taxable amount
Taxable income
Multiplied by income tax rate
 Income tax payable

Deferred tax liability

b Particulars
Income tax expense - current
Income tax payable

Income tax expense - deferred

Deferred tax liability

c Income from continuing operations before income taxes

Income tax expense:
Current
Deferred
Profit

4 - 10 JUDE COMPANY
a Inventories (950,000 - 850,000)
Building and equipment (10,000,000 - 8,200,000)
Future taxable amount

Accounts receivable (2,100,000 - 1,900,000)

Provision for warranty
Unearned rent
Future deductible amount

b Taxable income
Multiplied by income tax rates
Income tax payable

Future taxable amount

Multiplied by income tax rates
Deferred tax liability

Future deductible amount

Multiplied by income tax rates
Deferred tax asset

c Particulars
Income tax expense - current
Income tax payable
Deferred tax liability
Income tax expense - deferred
1,400,000 - 570,000 = 830,000

Income tax expense - deferred

Deferred tax asset
525,000 - 450,000 = 75,000
TAXES

3,000,000.00
- 1,800,000.00
1,200,000.00

1,200,000.00
30%
360,000.00

1,800,000.00
30%
540,000.00

Debit Credit
360,000.00
540,000.00
360,000.00
540,000.00

2,000,000.00
1,550,000.00
3,550,000.00

3,550,000.00
30%
1,065,000.00

1,550,000.00
30%
465,000.00

Debit Credit
1,065,000.00
465,000.00
 1,065,000.00
465,000.00

240,000.00
30%
72,000.00

890,000.00
30%
267,000.00

600,000.00

2,000,000.00
30%
600,000.00

600,000.00
195,000.00
795,000.00

12,000,000.00
(430,000)
450,000.00
12,020,000.00

44,800.00
108,800.00
86,400.00
240,000.00

2,200,000.00
400,000.00
- 140,000.00
2,460,000.00
- 700,000.00
1,760,000.00
30%
 528,000.00

240,000.00

Debit Credit
528,000.00
528,000.00

240,000.00
240,000.00

2,200,000.00

528,000.00
240,000.00 - 768,000.00
1,432,000.00

100,000.00
1,800,000.00
1,900,000.00

200,000.00
800,000.00
500,000.00
1,500,000.00

5,000,000.00
30%
1,500,000.00

1,900,000.00
30%
570,000.00

1,500,000.00
30%
450,000.00

Debit Credit
1,500,000.00
1,500,000.00
830,000.00
830,000.00

75,000.00
75,000.00