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This Study Resource Was: ACTIVITY 1. Zeus Company Reported Pretax Financial Income of P3,000,000 For The Year Ended

Zeus Company reported pretax financial income of P3,000,000 for 2020 but taxable income was higher at P4,000,000 due to rental received in advance being taxable when received. The income tax rate is 30% and Zeus Company paid P500,000 in estimated taxes. The total income tax expense for 2020 is P1,200,000.

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603 views1 page

This Study Resource Was: ACTIVITY 1. Zeus Company Reported Pretax Financial Income of P3,000,000 For The Year Ended

Zeus Company reported pretax financial income of P3,000,000 for 2020 but taxable income was higher at P4,000,000 due to rental received in advance being taxable when received. The income tax rate is 30% and Zeus Company paid P500,000 in estimated taxes. The total income tax expense for 2020 is P1,200,000.

Uploaded by

MA. CRISSANDRA BUSTAMANTE
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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ACTIVITY 1.

Zeus Company reported pretax financial income of P3,000,000 for the year ended
December 31,2020. The taxable income was P 4,000,000.

The difference is due to rental received in advance. Rental income is taxable when received.

The income tax rate is 30% and Zeus Company made estimated tax payment of P500,000
during the current year.

Required:

a. What are the journal entries relating to income tax for 2020?

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co
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o.
rs e
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b. What is the total income tax expense for 2020?
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aC s
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NOTE:

It is recorded as deferred Tax Asset since Accounting Income (3,000,000) is lower than its
is

Taxable income (4,000,000). Hence, Rental received in advance is an example of revenues and
Th

gains included in taxable income of current period but are included in accounting income of
future periods (Deferred Tax Asset).
sh

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