Stabilizer Company reported taxable income of P8,000,000 in the income tax return for the first year of operations.

The entity revealed the following temporary differences between financial income and taxable

income for the year:

Tax depreciation in excess of book depreciation 800,000

Accrual for product liability claim in excess of actual claim1,200,000

Reported installment sales income in excess

of taxable installment sales income2,600,000

Income tax rate30%

1.What is the deferred tax asset at year-end?

2.What is the deferred tax liability at year-end?

3.What is the deferred tax expense for the first year?

4.What is the total tax expense for the first year?

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An entity provided the following information on December 31, 2015:

Total reported income since incorporation1,700,000

Total cash dividends paid(800,000)

Unrealized holding loss on trading investment(120,000)

Total share dividends distributed(200,000)

Prior period adjustment recorded January 1, 2015 - credit75,000

5.What amount should be reported as retained earnings on December 31, 2015?

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An entity leased equipment to an unrelated party on July 1, 2015 for an eight-year period expiring June 30, 2023. Equal payments under the lease are P600,000 and are due on July 1 of each year. The first payment was made on July 1, 2015. The implicit rate of interest contemplated is 10%. The cash selling price of the equipment is P3,500,000 and the carrying amount is P2,800,000. The lease is appropriately recorded as a sales type lease.

6.What total amount of income should be recorded for the year ended December 31, 2015?

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An entity provided the following data related to the pension plan.

December 31, 2015 December 31, 2016

Defined benefit obligation8,400,000 11,100,000

Plan assets at fair value9,000,000 9,900,000

Net actuarial loss1,440,000 1,500,000

Discount rate 10%9%

Expected rate of return 8%7%

7.The contribution was P1,260,000 in 2016 and benefits paid totaled P1,125,000. What was the actual return on plan assets in 2016?

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An entity is committed to close a factory in 10 months and shall terminate the employment of all the remaining employees of the factory. Under the termination plan, an employee leaving before closure of factory shall receive on termination date a cash payment of P20,000. However, an employee that renders service until closure of the factory shall receive P60,000. There are 120 employees at the factory. The entity expects 20 employees to leave before closure and 100 employees to render service until closure.

8.What amount should be recognized as termination benefit?

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An entity reported P9,000,000 income before provision for income tax. The following data are provided for the current year:

Rent received in advance

1,600,000

Income from exempt municipal bonds

2,000,000

Depreciation deduction for income tax purposes in excess of depreciation

reported for financial reporting purposes

1,000,000

Tax payment during the current year

500,000

Income tax rate

30%

9.What amount of current income tax liability should be reported at year-end?

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Mutant Company's current liabilities include fines and penalties for environmental damage.The fines and penalties are stated at P5,000,000.The fines and penalties are not deductible for tax purposes.Tax rate is 32%.

10.What is the tax base of the fines and penalties?

a.None

b.P1,600,000

c.P5,000,000

d.P6,000,000

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An entity leased equipment to an unrelated party on July 1, 2015 for an eight-year period expiring June 30, 2023. Equal payments under the lease are P600,000 and are due on July 1 of each year. The first payment was made on July 1, 2015. The implicit rate of interest contemplated is 10%. The cash selling price of the equipment is P3,500,000 and the carrying amount is P2,800,000. The lease is appropriately recorded as a sales type lease.

11.What total amount of income should be recorded for the year ended December 31, 2015?