COLTRAGE CORP. was organized on January 1, 2014. The entity had pretax accounting income of P500,000 and taxable income of P800,000 for the year ended December 31, 2014. The only temporary difference is accrued product warranty costs that are expected to be paid as follows: 2015....... 100,000 2016..... 50,000 2017... 50,000 2018...... 100,000 The entity has never had any net operating losses and does not expect any in the future. The enacted income tax rates are 35% for 2014, 30% for 2015 through 2017, and 25% for 2018. On December 31, 2014, what amount should be reported as deferred tax asset?
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- XYZ Co. at the end of 2018, its first year of operations, prepared a reconciliation betweenpretax financial income and taxable income as follows:Pretax financial income € 750,000Estimated expenses deductible for taxes when paid 1,200,000Extra depreciation (1,350,000)Taxable income € 600,000Estimated warranty expense of €800,000 will be deductible in 2019, €300,000 in 2020, and€100,000 in 2021. The use of the depreciable assets will result in taxable amounts of €450,000in each of the next three years.Instructions(a) Prepare a table of future taxable and deductible amounts.(b) Prepare the journal entry to record income tax expense, deferred income taxes, andincome taxes payable for 2018, assuming an income tax rate of 40% for all years.On January 1, 2020, Allure Company sold an equipment with a carrying amount of P800,000, receiving a noninterest bearing note due in three years with a face amount of P1,000,000. There is to established market value for the equipment. The interest rate on similar obligations is 12%, The present value of 1 at 12% for three periods is .712. What amount should be reported as interest income for 2020/ A.288,000 B.120,000 C.96,000 D.85,440On January 1, 2025, Waterway Co. sold equipment in exchange for an $820000 zero-interest-bearing note due on January 1, 2018. The prevailing rare of interest for anote of this type at January 1, 2025 was 10%. The present value of $1 at 10% for three periods of 0.75131. What amount of interst revenue should be reported in Waterway's 2026 income statement?
- The following transaction relate to Tool Company’s contingencies. The financial statements are dated December 31, 2023 and were issued on March 31, 2024. a. Tool’s products carry one –year warranty against manufacturer defects. Based on past experience, warranty costs are expected to be 4% of sales. Sales for 2023 were P2,000,000 and actual warranty cost incurred was P30,000. b. In December 2023, an NGO filed suit against Tool seeking penalties for violation of clean air laws. Tool’s counsel advised that is probable that the entity will lose the case and that the amount of penalty is P2,000,000. Appropriately, the entity recorded the liability. On January 15, 2024, Tools reached a settlement to pay P1,500,000 in penalty. c. Tools is the plaintiff in a P4,000,000 suit filed against a supplier. The attorney advised that it is probable that the entity will win the case and that the award is P2,500,000. On March 15, 2024, the court ruled in favor of Tools and received P2,000,000.…Constellation Corp. reported the following liability balances on December 31, 2021: 10% note payable issued on October 1, 2020, maturing October 1, 2022... 12% note payable issued on March 1, 2020, on March 1, 2022.... .P 2,000,000 4,000,000 The 2021 financial statements were issued on March 31, 2022. Under the loan agreement, the entity has the right on December 31, 2021 to roll over the 10% note payable for at least 12 months after December 31, 2021. On March 1, 2022, entire P 4,000,000 balance of the 12% note payable was refinanced through issuance of a long-term obligation payable lump-sum. What amount of the notes payable should be classified as current on December 31, 2021?On July 1, 2018, ABC Company borrowed P1,000,000 on a 10% five-year note payable. OnDecember 31, 2018, the fair value of the note is determined to be P975,000 based on marketand interest factors. The entity has elected the fair value option for reporting the financialliability.Compute the following and show your solution:a. Interest expense for 2018b. carrying amount of the note payable on December 31, 2018
- XYZ Co. at the end of 2018, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income € 750,000 Estimated expenses deductible for taxes when paid 1,200,000 Extra depreciation (1,350,000) Taxable income € 600,000 Estimated warranty expense of €800,000 will be deductible in 2019, €300,000 in 2020, and €100,000 in 2021. The use of the depreciable assets will result in taxable amounts of €450,000 in each of the next three years. Instructions (a) Prepare a table of future taxable and deductible amounts. (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2018, assuming an income tax rate of 40% for all years.15. On January 1, 200A, ABC rendered services to XYZ at a price of P450,000. ABC received P500,000 5-year promissory note from XYZ to be paid in full on December 200E. Assume the use of straight line method to amortized any premium or discount on note receivable, the total amount of income ABC realized from this transaction for 200A would be9. Black Co., organized on January 2, 20x0, had pretax financial statement income of P500,000 and taxable income of P800,000 for the year ended December 31, 20x0. The only temporary differences are accrued product warranty costs, which Black expects to pay as follows: 20x1 P100,000 20x2 50,000 20x3 50,000 20x4 100,000 The enacted income tax rates are 25% for 20x0, 300% for 20x1 through 20x3, and 35% for 20x4 Black believes that future years' operations will produce profits. In its December 31, 20x0, balance sheet, what amount should Black report as deferred tax asset? c. 90,000 d. 95,000 h a. 50,000 b. 75,000 7:34 pm AD ENG /1/2021 27°C
- Black Co., organized on January 2, 2004, had pretax financial statement income of P500,000 and taxable income of P800,000 for the year ended December 31, 2004. The only temporary differences are accrued product warranty costs, which Black expects to pay as follows: P 100,000 P 50,000 P 50,000 P 100,000 2005 2006 2007 2008 The enacted income tax rates are 25% for 2004, 30% for 2005 through 2007, and 35% for 2008. Black believes that future years' operations will produce profits. 20) In its December 31, 2004 balance sheet, what amount should Black report as deferred tax asset? a. P50,000 b. P75,000 C. P90,000 d. 95,000Black Company, organized on January 2, 20X1, had pre-tax accounting income of $500,000 and taxable income of $800,000 for the year ended December 31, 20X1. The only temporary difference is accrued product warranty costs, which are expected to be paid as follows: 20X2 20X3 20X4 20X5 $100,000 50,000 50,000 100,000 Circumstances indicate that it is highly likely that Black will have taxable income in the future. It had no temporary differences in prior years. The enacted income tax rate is 21%. Required: 1. In Black's December 31, 20X1, balance sheet, how much should the deferred tax asset be? 2. Suppose that as of December 31, 20X1, a newly enacted law called for the tax rate to change to 25%, effective January 1, 20X3. Then what would be the amount of the deferred tax asset at December 31, 20X1?Mazda Company reported the following liability balances on December 31, 2015 10% note payable issued on October 1, 2014 maturing October 1, 2016 12% note payable issued on March 1, 2014 maturing on March 1, 2016 a. 6,000,000 b. 4,000,000 C. 2,000,000 d. 2,000,000 The 2015 financial statement were issued on March 31, 2016. The entity has the discretion to refinance the 10% note payable for least twelve months after December 31, 2015 the 12% note payable was refinanced on a long-term basis. What amount of the notes payable should be classified as noncurrent on December 31, 2015? 0 1,000,000