Problem 1: An entity reported pretax financial income of P7,200,000 for the current year. Included in
other income was P200,000 of tax-exempt interest revenue from government bonds held by the entity.
The income statement included depreciation expense of P1,000,000 for machine and the income tax
return reported P1,500,000 as depreciation on the machine. The enacted tax rate is 25% for the current
year and future years. What is the current tax expense for the current year?
A. P1,625,000 B. P1,750,000 C. P1,675,000 D. P1,575,000
Problem 2: During the current year, an entity reported pretax financial income of P6,000,000. Included in
the pretax financial income are P1,000,000 of nontaxable life insurance proceeds received as a result of
the death of an officer, P1,800,000 of estimated warranty expense accrued at year-end and P200,000 of
life insurance premium for a policy for an officer. No income tax was previously paid during the year and
the income tax rate is 25%.
1. What amount should be reported as income tax payable at year-end?
A. P1,500,000 B. P1,550,000 C. P1,450,000 D. P1,750,000
2. What amount should be reported as total tax expense?
A. P1,300,000 B. P1,250,000 C. P1,550,000 D. P1,200,000
Problem 3: At the end of the first year of operation, an entity had taxable temporary difference totaling
P1,500,000. The entity also had deductible temporary difference totaling P500,000. Pretax financial
income for the current year was P8,500,000. The income tax rate is 25%.
1. What amount should be reported as current tax expense for current year?
A. P2,125,000 B. P1,750,000 C. P2,375,000 D. P1,875,000
2. What amount should be reported as net deferred tax expense or benefit for the current year?
A. P250,000 expense B. P250,000 benefit C. P375,000 expense D. 375,000 benefit
Problem 4: An entity was organized on January 1, 20x23. The entity had pretax accounting income of
P6,000,000 and taxable income of P9,000,000 for the current year. The only temporary difference is
accrued product warranty cost is expected to be paid in 20x24. The enacted tax rates are 30% for 20x23
and 25% for 20x24 and thereafter. What amount should be reported as total income tax expense for
20x23?
A. P1,800,000 B. P2,700,000 C. P1,950,000 D. P3,450,000
other income was P200,000 of tax-exempt interest revenue from government bonds held by the entity.
The income statement included depreciation expense of P1,000,000 for machine and the income tax
return reported P1,500,000 as depreciation on the machine. The enacted tax rate is 25% for the current
year and future years. What is the current tax expense for the current year?
A. P1,625,000 B. P1,750,000 C. P1,675,000 D. P1,575,000
Problem 2: During the current year, an entity reported pretax financial income of P6,000,000. Included in
the pretax financial income are P1,000,000 of nontaxable life insurance proceeds received as a result of
the death of an officer, P1,800,000 of estimated warranty expense accrued at year-end and P200,000 of
life insurance premium for a policy for an officer. No income tax was previously paid during the year and
the income tax rate is 25%.
1. What amount should be reported as income tax payable at year-end?
A. P1,500,000 B. P1,550,000 C. P1,450,000 D. P1,750,000
2. What amount should be reported as total tax expense?
A. P1,300,000 B. P1,250,000 C. P1,550,000 D. P1,200,000
Problem 3: At the end of the first year of operation, an entity had taxable temporary difference totaling
P1,500,000. The entity also had deductible temporary difference totaling P500,000. Pretax financial
income for the current year was P8,500,000. The income tax rate is 25%.
1. What amount should be reported as current tax expense for current year?
A. P2,125,000 B. P1,750,000 C. P2,375,000 D. P1,875,000
2. What amount should be reported as net deferred tax expense or benefit for the current year?
A. P250,000 expense B. P250,000 benefit C. P375,000 expense D. 375,000 benefit
Problem 4: An entity was organized on January 1, 20x23. The entity had pretax accounting income of
P6,000,000 and taxable income of P9,000,000 for the current year. The only temporary difference is
accrued product warranty cost is expected to be paid in 20x24. The enacted tax rates are 30% for 20x23
and 25% for 20x24 and thereafter. What amount should be reported as total income tax expense for
20x23?
A. P1,800,000 B. P2,700,000 C. P1,950,000 D. P3,450,000
