Question

Details of CPA Company are as follows:

Sales 5,000,000

           Cost of Goods Sold                                                                 2,000,000

           Interest Income reported 5,000

           Operating Expense per PFRS                                                 1,500,000

           Warranty Expense                                                                     250,000

           Actual Warranty Paid                                                                 200,000

           Depreciation Expense per PFRS                                               200,000

           Depreciation Expense per BIR                                                  150,000

           Doubtful Accounts 100,000

           Accounting Income                                                                   400,000

           Tax Rate                                                                                   30%

1.    How much is the Income Tax Expense of CPA Company?

2.    How much is the Income Tax Payable (Current Tax Expense) of CPA Company?

3. Statement I       : Future Taxable Difference is a Permanent Difference

Statement II      : Future Deductible Difference is a Temporary Difference

1. Both Statements are True
2. Both Statements are False
3. Only Statement 1 is True
4. Only Statement 2 is True

1. 4. Statement I       : In a Direct Financing Lease the Lessor earn from Financing Income Only

Statement II      : In a Direct Financing Lease the Lessor does not earn Dealers Income

1. Both Statements are True
2. Both Statements are False
3. Only Statement 1 is True
4. Only Statement 2 is True

Answer 1

1	INCOME TAX EXPENSES OF CPA COMPANY
	INCOME
	Sales	5000000
	Interest Income reported	5000
	Accounting Income	400000
	TOTAL INCOME (A)	5405000
	EXPENSES
	Cost of goods sold	2000000
	Operating Expenses	1500000
	Warranty Expenses	250000
	Depreciation expenses per PFRS	200000
	Doubtful Accounts	100000
	TOTAL EXPENSES (B)	4050000
	INCOME TAXABLE (A - B)	1355000
	Tax Rate	30%
	Income tax Expenses of CPA company	406500
	( 1355000 X 30%)
2	INCOME TAX PAYABLE
	INCOME TAXABLE AS PER ACCOUNTING	1455000
	Add: Depreciation expenses - PFRS	200000
	Add: Warranty Expenses	250000
	TOTAL	1905000
	Less: Depreciation as per BIR	150000
	Less: Actual waranty paid	200000
	INCOME TAXABLE AS PER BIR	1555000
	Tax Rate	30%
	Current tax Expenses of CPA company	466500
	( 1355000 X 30%)
3	d. Only Statement 2 is True
4	c. Only Statement 1 is True