Help me to know and answer the following:

1.The amount of income taxes due to the government for a period of time is rarely the amount reported on the income statement for that period as income tax expense.

(a) Explain the objectives of accounting for income taxes in general purpose financial statements.

(b) Explain the basic principles that are applied in accounting for income taxes at the date of the financial statements to meet the objectives discussed in (a).

2.This year AB Company has each of the following items in its income statement.

Part A.

1. Gross profit on instalment sales

2. Revenues on long term construction contracts

3. Estimated costs of product warranty contracts

4. Premiums on officers' life insurance policies as AB Company as beneficiary.

Instructions:

(a) Under what conditions would deferred income taxes need to be reported in the financial statements?

(b) Specify when deferred income taxes would need to be recognized for each of the items above, and indicate the rationale for such recognition.

PART B.

AB Company's president has heard that deferred income taxes can be classified in different ways in the balance sheet.

Instructions:

Identify the conditions under which deferred taxes would be classified as noncurrent item in the balance sheet. What justification exists for such classification?

3.RM Company, owner of RM Mall, charges Hope Clothing Store, a rental fee of P60, 000 per month plus 5% yearly profits over P5, 000,000. Jacob, the owner of the store, directs his accountant Jun Reyes, to increase the estimate of bad debt expense and warranty costs in order to keep profits at P4, 750,000.

Instructions:

.Should Jun Reyes follow his boss' directive? Who is harmed if the estimates are increased?