Accounting Income Before Tax
Permanent Differences:
(+) Nondeductible Expenses
(-) Nontaxable Revenues Interest Income on Gov't Bonds
Financial Income Subject to Tax
Temporary Differences:
(+) Deductible Temporary Differences Excess in Warranty Expense
Excess in Income from Installment Sale
(-) Taxable Temporary Differences Excess in Depreciation Expense
Taxable Income
1. Current Tax Liability = Taxable Income x Current Rate = 7,500,000 30%
2. Deferred Tax Liablility = FTA x Future Enacted Rate = 1,300,000 30%
2. Deferred Tax Asset = FDA x Future Enacted Rate = 300,000
200,000
500,000 30%
3. Total Income Tax Expense:
Current Tax Expense
(+) DTL - Deferred Tax Expense - TTD
(-) DTA - Income Tax Benefit - DTD
Total Income Tax Expense
4. Deferred Tax Expense
DTA, beg 400,000 0 DTA, end
DTL, end 1,500,000 1,000,000 DTL, beg
ITP, end ITP, beg
Tax Paid 1,900,000 900,000 Tax Expense
FDA = DTA = DTD
Expenses, Acctg > Expenses, Tax
Revenue, Acctg < Revenue, Tax
FTA = DTL = TTD
Expenses, Acctg < Expenses, Tax
Revenue, Acctg > Revenue, Tax
9,000,000
700,000
8,300,000
300,000
m Installment Sale 200,000
1,300,000
7,500,000
2,250,000
390,000
150,000
2,250,000
390,000
150,000
2,490,000
Acctg Tax Difference
1. Accounts Receivable 1,500,000 1,750,000 250,000 DTA
2. Motor Vehicle 1,650,000 1,250,000 -400,000 DTL
3. Provision for Warranty 120,000 0 120,000 DTA
4. Deposit Received in Advance 150,000 0 150,000 DTA
Deferred Tax Asset = 250,000 + 120,0000 + 150,000 = 520,000 x 30%
Deferred Tax Liability = 400,000 400,000 x 30%
FDA = DTA = DTD
Expenses, Acctg > Expenses, Tax
Revenue, Acctg < Revenue, Tax
Asset, Acctg < Asset, Tax
Liability, Acctg < Liability, Tax
FTA = DTL = TTD
Expenses, Acctg < Expenses, Tax
Revenue, Acctg > Revenue, Tax
Asset, Acctg > Asset, Tax
Liability, Acctg > Liability, Tax
= 156,000
= 120,000
Accounting Income Before Tax
Permanent Differences:
(+) Nondeductible Expenses Premium on life of key officer
(-) Nontaxable Revenues Interest Income on municipal bonds
Financial Income Subject to Tax
Temporary Differences:
(+) Deductible Temporary Differences Excess on Warranty Expense
Excess on Bad debt Expense
Advance rent received
(-) Taxable Temporary Differences Excess on Depreciation Expense
Taxable Income
Current Tax Liability
8. Deferred Tax Liability
Excess on Depreciation Expense 200,000 x 0.3
9. Deferred Tax Asset
Excess on Warranty Expense 10,000
Excess on Bad debt Expense 40,000
Advance rent received 300,000
350,000 x 0.3
11. Total Income Tax Expense:
Current Tax Expense
(+) DTL - Deferred Tax Expense - TTD
(-) DTA - Income Tax Benefit - DTD
Total Income Tax Expense
FDA = DTA = DTD
Expenses, Acctg > Expenses, Tax
Revenue, Acctg < Revenue, Tax
Asset, Acctg < Asset, Tax
Liability, Acctg < Liability, Tax
FTA = DTL = TTD
Expenses, Acctg < Expenses, Tax
Revenue, Acctg > Revenue, Tax
Asset, Acctg > Asset, Tax
Liability, Acctg > Liability, Tax
4,000,000
200,000
municipal bonds 50,000
4,150,000 7. C
10,000
40,000
300,000
on Expense 200,000
4,300,000 10. D
x 30%
1,290,000 12. C
=(60000/200000) 60,000 A.
=(105,000/350,000) 105,000 D.
1,290,000
60,000
105,000
1,245,000 B.
Acctg Tax Difference
1. Property 10,000,000 7,000,000 -3,000,000 DTL
2. Plant and Equipment 5,000,000 4,000,000 -1,000,000 DTL
3. Inventory 2,000,000 4,000,000 2,000,000 DTA
4. Trade Receivables 2,000,000 3,000,000 1,000,000 DTA
Deferred Tax Liability Deferred Tax Asset
Property 3,000,000 Inventory
Plant and Equipment 1,000,000 Trade Receivables
4,000,000
x 30%
1,200,000
FDA = DTA = DTD
Expenses, Acctg > Expenses, Tax
Revenue, Acctg < Revenue, Tax
Asset, Acctg < Asset, Tax
Liability, Acctg < Liability, Tax
FTA = DTL = TTD
Expenses, Acctg < Expenses, Tax
Revenue, Acctg > Revenue, Tax
Asset, Acctg > Asset, Tax
Liability, Acctg > Liability, Tax
2,000,000
1,000,000
3,000,000
x 30%
900,000
Accounting Income Before Tax
Permanent Differences:
(+) Nondeductible Expenses
(-) Nontaxable Revenues
Financial Income Subject to Tax
Temporary Differences:
(+) Deductible Temporary Differences
(-) Taxable Temporary Differences
Taxable Income
14. Current Tax Liability = Taxable Income x Current Rate = 10,200,000
15. Income Tax Expense - Income Statement
> Accounting or financial income subject to tax x tax Rate 11,000,000
12,000,000
1,000,000
11,000,000
800,000
10,200,000
x 30% = 3,060,000
x 30% = 3,300,000
Accounting Income Before Tax
Permanent Differences:
(+) Nondeductible Expenses
(-) Nontaxable Revenues
Financial Income Subject to Tax
(+) Deductible Temporary Differences
(-) Taxable Temporary Differences
Taxable Income
16. Current Tax Liability = Taxable Income x Current Rate = 200,000
Less: Tax Payment made during the year (-)
Current Tax Liability
FDA = DTA = DTD
Expenses, Acctg > Expenses, Tax
Revenue, Acctg < Revenue, Tax
FTA = DTL = TTD
Expenses, Acctg < Expenses, Tax
Revenue, Acctg > Revenue, Tax
400,000
175,000
225,000
25,000
200,000
x 35% 70,000
27,500
42,500
penses, Tax
penses, Tax
17. Deferred Tax Asset/Liability on 12/31/2016
Acctg Tax Difference
2015 1,600,000 600,000 1,000,000 DTL
2016 2,600,000 1,400,000 1,200,000 DTL
2,200,000
x 30%
660,000 B.
18. Net deferred tax expense
Accounting Income Before Tax
Permanent Differences:
(+) Nondeductible Expenses
(-) Nontaxable Revenues
Financial Income Subject to Tax
(+) Deductible Temporary Differences
(-) Taxable Temporary Differences 2019 110,000
2020 120,000
2021 120,000
Taxable Income
Current Tax Expense
Deferred Tax Liability 350,000 x 30% =
Minus: Deferred Tax Asset 150,000 x 30% =
Net deferred tax expense - 2018
FDA = DTA = DTD
Expenses, Acctg > Expenses, Tax
Revenue, Acctg < Revenue, Tax
FTA = DTL = TTD
Expenses, Acctg < Expenses, Tax
Revenue, Acctg > Revenue, Tax
600,000
600,000
150,000
350,000
400,000
x 30%
120,000
105,000
45,000
60,000 B.