Problem $5$

During the current year $2024,$ an entity reported pretax financial income of P$7,850,000.$ Included in the pretax financial income are P$1,570,000$ of nontaxable life insurance proceeds received as a result of the death of an officer, P$1,960,000$ of estimated warranty expense accrued at year$-$end and P$390,000$ of life insurance premiums for a policy for an officer. The temporary difference of accrued product warranty cost is expected to be paid in $2025.$

Included also in financial income was P$260,000$ of tax$-$exempt interest revenue from government bonds held by the entity. The income statement included depreciation expense of P$2,440,000$ for a machine and the income tax return reported P$3,640,000$ as depreciation on the machine.

No income tax was previously paid during the year and the income tax rate is $25\%.$

$1.$ What amount should be reported as current tax expense?

A$.1,792,500$

B$.1,602,500$

C$.490,000$

D$.300,000$

$2.$ What amount should be reported as deferred tax asset?

A$.1,792,500$

B$.1,602,500$

C$.490,000$

D$.300,000$

$3.$ What amount should be reported as deferred tax liability?

A$.1,792,500$

B$.1,602,500$

C$.490,000$

D$.300,000$

$4.$ What amount should be reported as total income tax expense?

A$.1,792,500$

B$.1,602,500$

C$.490,000$

D$.300,000$