FA4 – MIDTERM QUIZ NO.

2 – SET A

1. Schultz Company reported a pretax accounting income of 6. Viking reported pretax financial income of P9,000,000 in
P4,500,000 for the year ended December 31, 2019. The the income statement for the current year.
following items are included in the determination of the Tax Accounting
accounting income: return Record
Estimated litigation loss which will become Rent Income 105,000 180,000
tax deductible when settled in the future 450,000 Depreciation 420,000 330,000
Dividend received 150,000 Payment of Penalty 15,000
Revenue from an installment sale which will Premiums on life insurance 135,000
be recognized as taxable income as Income tax rate 25%
received over the next three years 500,000
Income tax rate 30% What amount should be reported as current provision for
income tax for the current year?
Schultz Company should report current tax expense for the a. 2,246,250 c. 1,497,500
year 2019 b. 2,287,500 d. None of these.
a. 1,320,000 c. 1,380,000
b. 1,290,000 d. 1,680,000 7. West Company leased a building and received
P2,400,000 annual rental payment on May 15, 2023. The
For the next two items: beginning of the lease was June 1, 2023. Rental income
Aris Company computed a pretax accounting income of is taxable when received. The income tax rate is 25%.
P4,500,000 for its first year of operations ended December The entity had no other permanent or temporary
31, 2019. In preparing the income tax return for 2019, the differences. What amount of deferred tax asset/liability
following differences are noted between accounting income should be reported on December 31, 2023?
and taxable income. a. 350,000 asset c. 250,000 asset
b. 350,000 liability d. 250,000 liability
Nondeductible expenses 150,000
Nontaxable revenue 250,000 For the next three items:
Gross income on installment sales reported
in financial income but not in taxable Dunn Company reported in the income statement for the
income (expected to reverse in 2020) 900,000 current year P900,000 income before provision for
Provision for doubtful accounts 90,000 income tax.
Income tax rate 30%
Rent received in advance 150,000
2. What is the “current tax expense”? Interest income on time deposit 200,000
a 1,563,000 c. 1,077,000 Depreciation deducted for income tax
. purposes in excess of financial depreciation 100,000
b 1,023,000 d. 0 Income tax rate 30%
.
8. What amount should be reported as current provision for
3. What is the amount of total income tax expense? income tax or current tax expense for the current year?
a 1,350,000 c. 1,380,000 a. 270,000 c. 225,000
. b. 255,000 d. 210,000
b 1,320,000 d. None of these.
. 9. What amount should be reported as total tax expense?
a. 330,000 c. 270,000
b. 210,000 d. 285,000
4. During the current year, Tiger Company reported pretax
financial income of P5,000,000. Included in the pretax 10. Everest Company began operations at the beginning of
financial income are P900,000 of nontaxable life insurance the current year. At the end of the first year of operations,
proceeds received as a result of the death of an officer, the entity reported P10,000,000 accounting income in the
P1,200,000 of estimated warranty expense accrued at income statement.
year-end and P200,000 of life insurance premiums for a
policy for an officer. No income tax was previously paid Analysis of the difference of the accounting income and
during the year and the income tax rate is 30%. What the taxable income revealed:
amount should be reported as income tax payable at year-
end? Nontaxable permanent difference 500,000
a. 1,500,000 c. 1,230,000 Nondeductible permanent difference 700,000
b. 1,290,000 d. 1,650,000 Future taxable temporary difference 1,200,000
Future deductible temporary difference 1,000,000
5. Aries Company reported a deferred tax asset of P9,000 on
December 31,2021. The entity reported pretax financial What is the amount of current income tax expense?
income of P300,000 for 2022. On December 31, 2022, the a. 2,400,000 c. 2,600,000
entity had cumulative taxable differences of P70,000 and b. 2,000,000 d. 2,500,000
no cumulative deductible differences. The income tax rate
is 30%. What amount should be reported as deferred tax
expense for 2022?
a. 12,000 c. 21,000
b. 30,000 d. 60,000

Name: Period: Midterm

1. Schultz Company reported a pretax accounting income of 6. Viking reported pretax financial income of P9,000,000 in
P4,500,000 for the year ended December 31, 2019. The the income statement for the current year.
following items are included in the determination of the Tax Accounting
accounting income: return Record
Estimated litigation loss which will become Rent Income 105,000 180,000
tax deductible when settled in the future 450,000 Depreciation 420,000 330,000
Dividend received 150,000 Payment of Penalty 15,000
Revenue from an installment sale which will Premiums on life insurance 135,000
be recognized as taxable income as Income tax rate 25%
received over the next three years 500,000
Income tax rate 30% What amount should be reported as current provision for
income tax for the current year?
Schultz Company should report current tax expense for the a. 2,246,250 c. 1,497,500
year 2019 b. 2,287,500 d. None of these.
a. 1,320,000 c. 1,380,000
b. 1,290,000 d. 1,680,000 7. West Company leased a building and received
P2,400,000 annual rental payment on May 15, 2023. The
For the next two items: beginning of the lease was June 1, 2023. Rental income
Aris Company computed a pretax accounting income of is taxable when received. The income tax rate is 25%.
P4,500,000 for its first year of operations ended December The entity had no other permanent or temporary
31, 2019. In preparing the income tax return for 2019, the differences. What amount of deferred tax asset/liability
following differences are noted between accounting income should be reported on December 31, 2023?
and taxable income. a. 350,000 asset c. 250,000 asset
b. 350,000 liability d. 250,000 liability
Nondeductible expenses 150,000
Nontaxable revenue 250,000 For the next three items:
Gross income on installment sales reported
in financial income but not in taxable Dunn Company reported in the income statement for the
income (expected to reverse in 2020) 900,000 current year P900,000 income before provision for
Provision for doubtful accounts 90,000 income tax.
Income tax rate 30%
Rent received in advance 150,000
2. What is the “current tax expense”? Interest income on time deposit 200,000
a 1,563,000 c. 1,077,000 Depreciation deducted for income tax
. purposes in excess of financial depreciation 100,000
b 1,023,000 d. 0 Income tax rate 30%
.
8. What amount should be reported as current provision for
3. What is the amount of total income tax expense? income tax or current tax expense for the current year?
a 1,350,000 c. 1,380,000 a. 270,000 c. 225,000
. b. 255,000 d. 210,000
b 1,320,000 d. None of these.
. 9. What amount should be reported as total tax expense?
a. 330,000 c. 270,000
b. 210,000 d. 285,000
4. During the current year, Tiger Company reported pretax
financial income of P5,000,000. Included in the pretax 10. Everest Company began operations at the beginning of
financial income are P900,000 of nontaxable life insurance the current year. At the end of the first year of operations,
proceeds received as a result of the death of an officer, the entity reported P10,000,000 accounting income in the
P1,200,000 of estimated warranty expense accrued at income statement.
year-end and P200,000 of life insurance premiums for a
policy for an officer. No income tax was previously paid Analysis of the difference of the accounting income and
during the year and the income tax rate is 30%. What the taxable income revealed:
amount should be reported as income tax payable at year-
end? Nontaxable permanent difference 500,000
a. 1,500,000 c. 1,230,000 Nondeductible permanent difference 700,000
b. 1,290,000 d. 1,650,000 Future taxable temporary difference 1,200,000
Future deductible temporary difference 1,000,000
5. Aries Company reported a deferred tax asset of P9,000 on
December 31,2021. The entity reported pretax financial What is the amount of current income tax expense?
income of P300,000 for 2022. On December 31, 2022, the a. 2,400,000 c. 2,600,000
entity had cumulative taxable differences of P70,000 and b. 2,000,000 d. 2,500,000
no cumulative deductible differences. The income tax rate
is 30%. What amount should be reported as deferred tax
expense for 2022?
a. 12,000 c. 21,000
b. 30,000 d. 60,000
Name: Period: Midterm
CYS: Quiz No. Quiz No. 2 (B)
Subject Code: Date: