(Round off your final answers to two decimal places.

CARL DE RETA Co. reported net income for the current year 2014 at
P10,000,000 before taxes. Included in the determination of the said net income
were:

Temporary differences:
Accrued warranty expenses 250,000
Rental payments made in advance 400,000
Advance collections from customers 500,000
Provision for probable losses 900,000

Permanent differences:
Non-taxable income 500,000
Non-deductible expenses 100,000

*The income tax rate is 40% and is not expected to change in the future.

REQUIRED:

(1) How much is the current tax expense?

(2) How much is the total tax expense?
(3) What is the total deferred tax asset to be presented in the 2014 statement of
financial position?
(4) What is the total deferred tax liability to be presented in the 2014 statement
of financial position?
(5) Assuming that the expected income tax rate for the following year is 35%,
what is the total tax expense?
LIAM POE Company reported the following carrying amount of assets and
liabilities at year-end:

Property 10,000,000
Plant and equipment 5,000,000
Inventory 4,000,000
Trade receivables 3,000,000
Trade payables 6,000,000
Cash 2,000,000

Additionally, a P1,000,000 impairment loss to trade receivables has been made.

This charge will not be allowed in the current year for tax purposes. The income
tax rate is 30%. The entity has made an inventory obsolescence provision of
P2,000,000 which is not allowable for tax purposes. However, for tax purposes,
the amount of plant and equipment and property was P4,000,000 and
P7,000,000 respectively.

REQUIRED:

(6) What is the deferred tax liability at year-end?

(7) What is the deferred tax asset at year-end?
VINA GO-ONG Company reported in the first year of operations pretax financial
income of P6,000,000. The current year tax rate is 30% and the enacted rate for
future years is 25%. The following differences existed:

Tax return Accounting record

Uncollectible accounts expense 200,000 300,000
Depreciation expense 800,000 500,000
Tax exempt interest revenue -- 150,000

REQUIRED:

(8) What is the current tax expense?

(9) What is the total tax expense?
NELLIE CHUN Company provided the following information at year-end:

Carrying amount Tax base

Accounts receivable 1,500,000 1,750,000
Motor vehicle 1,650,000 1,250,000
Provision for warranty 120,000 0
Deposit received in advance 150,000 0

An allowance for doubtful accounts of P250,000 has been raised against

accounts receivable for accounting purposes but such doubtful accounts are
deductible only when written off as uncollectible. The enacted income tax rate is
30%.

In a nutshell, 25% and 15% are the depreciation rates for taxation and
accounting respectively. In addition, the provision for warranty costs is
deductible when paid and deposits received in advance are taxable when
received.

REQUIRED:

(10) What amount should be reported as deferred tax liability?

(11) What amount should be reported as deferred tax asset?

-END-