PROBLEM 8

Details of CPA Company are as follows:

Sales 5,000,000

Cost of Goods Sold2,000,000

Interest Income reported 5,000

Operating Expense per PFRS1,500,000

Warranty Expense 250,000

Actual Warranty Paid 200,000

Depreciation Expense per PFRS200,000

Depreciation Expense per BIR150,000

Doubtful Accounts 100,000

Accounting Income 400,000

Tax Rate 30%

1.How much is the Financial Income subject to Income Tax?

2.How much is the Taxable Income subject to Income Tax?

3.How much is the Permanent Difference?

4.How much is the Total Temporary Difference?

5.How much is the Income Tax Expense?

6.How much is the Income Tax Payable (Current Tax Expense)?

7.How much is the Deferred Tax Asset?