Twinnie Company began operations on January 1, 2015. For external reporting, the company recognized revenue from all sales under

accrual method. However, in the tax return, the entity reported qualifying sales under the installment method. The gross profit on these

installment sales under each method was:

Accrual method Installment method

2015 1,600,000 600,000

2016 2,600,000 1,400,000

The income tax rate is 30%. There are no other temporary or permanent differences.

1. What amount should be reported as deferred tax asset or liability on December 31, 2016?

A. 660,000 asset B. 660,000 liability

C. 360,000 asset D. 360,000 liability

2. Breslin Co. had one temporary difference at the end of 2018 that will reverse and cause taxable amounts of P110,000 in 2019,

and P120,000 in 2020 and 2021. The company had also a deductible temporary difference of P150,000. The pre-tax financial

income for 2018 is P600,000 and the tax rate is 30%. There are no deferred taxes at the beginning of 2018. What is the net

deferred tax expense for 2018?

A. 45,000 B. 60,000 C. 105,000 D. 120,000