Question
On January 1, 2020, Valley Company entered into a 3-year construction contract that had an estimated gross revenue of P3,000,000. The entity used the percentage
On January 1, 2020, Valley Company entered into a 3-year construction contract that had an estimated gross revenue of P3,000,000.
The entity used the percentage of completion in recognizing income and reported construction income as:
2020 | 600,000 |
2021 | 1,500,000 |
2022 | 900,000 |
The cost recovery method is used for income tax purposes and the entity reported construction income as:
2020 | 0 |
2021 | 0 |
2022 | 3,000,000 |
This is the only timing difference between pretax accounting income and taxable income.
The entity reported income before construction income and tax as:
2020 | 2,400,000 |
2021 | 3,600,000 |
2022 | 3,200,000 |
Income tax required | 30% |
Complete the table below.
| 2020 | 2021 | 2022 |
FINANCIAL POSITION | |||
Deferred tax asset |
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Deferred tax liability |
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STATEMENT OF INCOME |
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Net income before tax |
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Taxable income |
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Current tax expense |
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Income tax benefit |
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Deferred tax expense |
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Total income tax expense |
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