Gross Sales/ Receipts xx

Deductibles xx
Taxable Income xx

Revenue xx
Other income xx
Expenses (xx)
Other Expenses (xx)
Net Income xx

Differences between accounting and Taxable income

A. Permanent Differences - Income that are not taxable forever

Income already subjected to
a. Interest Income
b. Interest Revenue
Nondeductible Expenses -
c. Interest are deductible but surcharges are not deductible expenses
B. Temporary Differences - These are differences between the carrying amount of an
asset or liability and its tax base
a. Timing differences- differences between accounting and taxable income

Taxable temporary Differences(TTD) or Future taxable amount (FTA)

Deferred Tax Liability = FTA/TTD x Future enacted tax rate
Total Income Tax Expense = Income Tax Current + Income tax deferred
Deductible Temporary Differences(DTD) or Future Deductible Amount (FDA)
Pre TAx Income 4,500,000
Warranty Expense 360,000
Revenue from Installment Sales (1,800,000)
Premiums 120,000

Warranty Expense Tax (200,000)

Revenue from Installment Sales 1,200,00
Taxable INcome 4,180,000
Tax rate 32%
Income Tax 1,337,600
Prob 3
Depreciation of the asset 100,000
2M/ 20 Years= 100,000

Depreciation of the asset using the tax implementation (200,000)

[(1/20years) x 2] x 2M =200,000
Difference between the two 100,000

Impairment loss 400,000

Difference (100,000)
Temporary difference 300,000
May 21, 2022: Audit of Leases- Liability
Accounting for Operating lease (PAS17)
Under the book of Leese
-Operating Lease

PFRS 16
-No operating Lease
-Accounted as finance lease

PAS 17
Accounting for finance Lease
PFRS 16
Answers:
1. D. 420,926
2. C. 36,111
3. C. 83,889
4. D. 217,037
Retire half of ur salary

Remeasurement gain or loss= Actual return-Interest Income

Net benefit asset= plant asset>Dbo (solution is Fv of Plant Asst - PV of DBO)
Net benefit Liab= DBO >PA

June 18, 2022: Audit of Shareholders’ Equity

(share based payment/ BCPS next week)
Shareholders’ Equity- Easiest to audit because transaction here do not happen on a daily
basis
1. Ordinary Share
2. Share premium-OS
3. Preference shares
4. Share premium- PS
5. Retained earnings
6. OCI

Issuance of OS in exchange of asset/ service = FV of a.) Asset/ service received

b.) Fv of SHares
c.) Par Value
Issuance of OS in exchange of Liability extinguished = FV of a.) Shares
b.) Liability Extinguished
c. ) CA of liability