Topic: Income Taxes | Intermediate Accounting

GUCCI Corp. in its first year of operations has the following differences between the carrying value and tax base of its assets and liabilities at the end of 20x6. Equipment (net) Estimated warranty liability Carrying Value P 800,000 40,000 Tax Base p 680,000 GUCCI estimates that the warranty liability will be settled in 20x7 The difference in equipment (net) Will result in taxable amounts as shown below Year 20x7 2 oxg 20x9 Amount P 40,000 60,000 20,000 The company has taxable income of P 800,000 for 2016. The income tax rate is 30%.