11. The following differences enter into the reconciliation of financial income and taxable income of Abbott Company for the year ended December 31, 2021, its first year of operations. The enacted income tax rate is 30% for all years. Pretax accounting income - P700,000 Excess tax depreciation - (320,000) Litigation accrual - 70,000 Unearned rent revenue deferred on the books but appropriately recognized in taxable income - 50,000 Interest received on government obligations - (20,000) Taxable income - P480,000 1.Excess tax depreciation will reverse equally over a four-year period, 2022-2025. 2.It is estimated that the litigation liability will be paid in 2025. 3.Rent revenue will be recognized during the last year of the lease, 2025. 4.Interest received on government obligations is expected to be P20,000 each year until their maturity at the end of 2025. Deferred tax asset for the year ended 2021 is
11. The following differences enter into the reconciliation of financial income and taxable income of Abbott Company for the year ended December 31, 2021, its first year of operations. The enacted income tax rate is 30% for all years.
Pretax accounting income - P700,000
Excess tax depreciation - (320,000)
Litigation accrual - 70,000
Unearned rent revenue deferred on the books but appropriately recognized in taxable income - 50,000
Interest received on government obligations - (20,000)
Taxable income - P480,000
1.Excess tax depreciation will reverse equally over a four-year period, 2022-2025.
2.It is estimated that the litigation liability will be paid in 2025.
3.Rent revenue will be recognized during the last year of the lease, 2025.
4.Interest received on government obligations is expected to be P20,000 each year until their maturity at the end of 2025.
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