Problem 16-13 (IFRS) Complex Company reported pretax accounting income of P12,800,000 for 2020 and P18,300,000 for 2021. The income tax rate is 30%. On January 1, 2020, the entity had deferred tax asset of P450,000 and no deferred tax liability. The deferred tax asset was due to a provision of P500,000 recognized on December 31, 2019 settled in 2020 at which time it was tax deductible. The other reason for the deferred tax asset was rent of P1,000,000 collected in 2019 but earned only in 2020. Life insurance premiums of P200,000 were recognized each year on key officers for 2020 and 2021. The entity paid for a two-year casualty insurance for P6,000,000 on January 1, 2020. The entire premium is tax deductible when paid. The entity collected rent from leasing some of its equipment. The rent is recognized as revenue when earned but taxable when collected. 2020 2021 Rent collected 3,300,000 3,500,000 Rent earned 2,500,000 3,300,000 The entity had trading investments. All gains and losses are recognized for tax purposes when the investments are sold. During 2020, the entity recognized P1, 700,000 unrealized losses on trading investments which were sold in 2021. Required: 1. Compute taxable income for 2020 and 2021. 2. Compute current tax expense and total tax expense for 2020 and 2021. 3. Compute deferred tax asset and deferred tax liability on December 31, 2020 and 2021. 4. Prepare journal entries for 2020 and 2021. 560