Pas 12 & Pas 19

6/22/23, 7:51 AM PAS 12 & PAS 19
PAS 12 & PAS 19 Total points 48/59
Email *
drrylagstn@gmail.com
A deferred tax liability represents the increase in taxes payable in future *1/1
years as a result of taxable temporary differences existing at the end of
the current year.
True
False
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6/22/23, 7:51 AM PAS 12 & PAS 19
Companies classify the balances in the deferred tax accounts on the *1/1
statement of financial position as non-current assets or non-current
liabilities.
True
False
Which of the following is true regarding reporting deferred taxes in the *1/1
financial statements prepared in accordance with PFRS?
Deferred tax assets/liabilities are offset with current tax assets/liabilities
Deferred tax assets and liabilities are classified as current and noncurrent based on
their expiration date.
Deferred tax assets and liabilities shall be classified as noncurrent.
Deferred tax assets are netted with deferred tax liabilities to arrive at one amount
presented on the balance sheet.
6/22/23, 7:51 AM PAS 12 & PAS 19
items of revenue and expenses which are included in either accounting *1/1
income or taxable income but will NEVER be included in the other
Accounting Income
Taxable Income
Income Tax Expense
Income Tax Expense - Curent
Permanent differences
Deferred Tax Liability
Deferred Tax Assets
Non-accumulating absences * 1/1
shall be expensed equal to the entire entitlement to paid leave, based on contract
regardless if this will be used or not.
shall be expensed equal to the used and unused paid leaves, given that it is
probable it will be used in the subsequent period.
shall be expensed only when cash is paid to the employee for the used leave
shall be expensed to the extent the employee used his/her paid leaves
6/22/23, 7:51 AM PAS 12 & PAS 19
Current tax expense plus deferred tax expense is * 1/1
A meaningless sum
Income tax expense
None of these
Tax deductible expense
6/22/23, 7:51 AM PAS 12 & PAS 19
What is the balance of the defined benefit liability/asset on January 1? * 0/1
1,500,000 liability
1,500,000 asset
2,000,000 liability
3,500,000 asset
Correct answer
6/22/23, 7:51 AM PAS 12 & PAS 19
1,500,000 asset
are accumulating compensated absences for which employees are not *1/1
entitled to a cash payment for unused entitlement on leaving
Employee Benefits
Short-term Employee Benefits
Post-employment Benefits
Other Long-term employment Benefits
Non-Accumulating Compensation
Non-Vesting Compensation
6/22/23, 7:51 AM PAS 12 & PAS 19
All of the ff. correctly relates to defined contribution plan, EXCEPT * 1/1
If the amount of plan assets are insufficient to meet the defined obligation to
the employees in future, the entity will have to make up any deficit
As long as the agreed contribution is done, the entity has no other further liability
related to the post-employment benefit.
The exposure to risk is borne by the employee
There is a defined or fixed amount of contribution into a fund
compensated absences that cannot be carried forward on the next *1/1

accounting period
Employee Benefits
6/22/23, 7:51 AM PAS 12 & PAS 19
All of the following are categories of employee benefits under PAS 19, *1/1
EXCEPT:
post-employment benefits
litigation settlements
termination benefits
short-term employee benefits
6/22/23, 7:51 AM PAS 12 & PAS 19
What is value of plan assets at yearend? * 1/1
P4,400,000
P1,220,000
P2,290,000
P3,270,000
6/22/23, 7:51 AM PAS 12 & PAS 19
If the income tax is 30%, what amount should be reported as income tax *1/1
expensecurrent portion in the income statement?
435,000
420,000
465,000
480,000
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6/22/23, 7:51 AM PAS 12 & PAS 19
Happi Company began operation at the beginning of the current year. At *1/1
the end of the first year of operation, the entity reported 6,000,000 income
before income tax in the income statement but only 5,100,000 taxable
income in the tax return. Analysis of the 900,000 difference revealed that
500,000 was permanent difference and 400,000 was temporary tax
liability difference related to a current asset. The enacted tax rate for the
current year and future year is 30%. What is the total income tax expense
to be reported in the income statement for the current year?
1,950,000
1,650,000
1,530,000
1,800,000
6/22/23, 7:51 AM PAS 12 & PAS 19
In arriving at the profit before tax for the year ended December 31, 2021, *1/1
Berry Co. has accrued rent receivable of 250,000 and warranty liability of
200,000. Both rent and warranties are dealt with on cash basis in tax
computations. Assuming Berry started operations in January 2021 and
the tax rate is 30%, what would be the net amount of Income Tax Expense
– Deferred for the year ended December 31, 2021?
P14,000 income tax expense - deferred
P17,500 income tax expense – deferred
Pretax financial income is the amount used to compute income tax *1/1
payable.
True
False
6/22/23, 7:51 AM PAS 12 & PAS 19
employee benefits provided in exchange of the termination of an *1/1

employee’s employment as a results of either an entity’s decision to
termination the employment before the normal retirement date or the
employee’s decision to accept an offer of benefits in exchange for the
termination of employment.
Employee Benefits
6/22/23, 7:51 AM PAS 12 & PAS 19
If the income tax is 30%, what amount should be reported as total income *1/1
tax expense for the first year?
435,000
420,000
465,000
480,000
6/22/23, 7:51 AM PAS 12 & PAS 19
pre-tax profit computed based on accounting standards and Conceptual *1/1

Framework (also called pretax financial income)
Accounting Income
Taxable Income
Income Tax Expense
Deferred Tax Assets
6/22/23, 7:51 AM PAS 12 & PAS 19
What amount should be reported as accrued liability on December 31, *0/1

2021 assuming the policy is to accrue liability at the end of each year at
the wage rate for that year?
478,800
453,600
399,000
Correct answer
6/22/23, 7:51 AM PAS 12 & PAS 19
478,800
6/22/23, 7:51 AM PAS 12 & PAS 19
What amount should be reported as retirement benefit expense in *0/1

profit/loss for the year?
750,000
600,000
2,100,000
1,950,000
6/22/23, 7:51 AM PAS 12 & PAS 19
Correct answer
750,000
These are absences for which an employee is paid, and if the employee’s *1/1
entitlement has not been used up at the end of the period, they are
carried forward to the next period.
Non-vesting
Accumulating
Non-accumulating
Vesting
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are the amounts of income taxes recoverable in future periods in respect *1/1
of deductible temporary differences, carry forward of unused tax losses,
and the carry forward of unused tax credits.
Accounting Income
Taxable Income
Income Tax Expense
Deferred Tax Assets
6/22/23, 7:51 AM PAS 12 & PAS 19
the amount of income taxes payable (recoverable) in respect of the *1/1

taxable profit (tax loss) for a period. Computed based on taxable profit
(loss) determined by tax authorities (as illustrated in the previous slide)
Accounting Income
Taxable Income
Income Tax Expense
Deferred Tax Assets
Subject to rules under tax laws, the tax effect of a operating loss *1/1
carryforward and MCIT may represent future tax savings and may result
in the recognition of a deferred tax asset.
True
False
6/22/23, 7:51 AM PAS 12 & PAS 19
Companies must consider presently enacted law that changes the tax *1/1
rate that becomes effective in future years when determining the tax rate
to apply to existing temporary differences.
True
False
Under the defined benefit plan, he ________ is the deficit or surplus of *1/1
present value of the defined benefit obligation less the fair value of plan
assets, adjusted for any effect of limiting a net defined benefit asset to
the asset ceiling.
net defined benefit liability (asset)
re-measurement entry
actuarial gain/loss
insurance plans
6/22/23, 7:51 AM PAS 12 & PAS 19
all forms of consideration given by the entity in exchange for service *1/1
rendered by employees or for termination of employee.
Employee Benefits
6/22/23, 7:51 AM PAS 12 & PAS 19
* 1/1
P480,000
P157,500
P180,000
Option 4
6/22/23, 7:51 AM PAS 12 & PAS 19
The deferred tax consequence attributable to a deductible temporary *1/1

difference and operating loss carry forward is known as
deferred tax asset
income tax expense
current taxes
deferred tax liability
An employee benefit is classified as ______ if it is expected to be settled *1/1

wholly before 12 months after the end of the annual reporting period in
which the employees render the related services
short-term employee benefits
other long-term employee benefits
termination benefit
6/22/23, 7:51 AM PAS 12 & PAS 19
Under PAS 19, defined benefit plan, the ________ is applied. With this *1/1
method, it is assumed that each period of service by an employee gives
rise to an additional unit of future benefits.
effective interest method
projected unit credit method
first-in first-out
straight line method
6/22/23, 7:51 AM PAS 12 & PAS 19
* 1/1
P180,000 deferred tax liability
P157,500 deferred tax asset
P180,000 deferred tax asset
P157,500 deferred tax liability
6/22/23, 7:51 AM PAS 12 & PAS 19
the aggregate amount included in the determination of profit or loss for *1/1
the period in respect of current tax and deferred tax.
Accounting Income
Taxable Income
Income Tax Expense
Deferred Tax Assets
6/22/23, 7:51 AM PAS 12 & PAS 19
* 1/1
294,000
360,000
327,000
300,000
6/22/23, 7:51 AM PAS 12 & PAS 19
employee benefits, other than termination benefits and short-term *1/1

benefits, that are payable after the completion of employment
Employee Benefits
Permanent differences do not give rise to future taxable or deductible *1/1

amounts.
True
False
6/22/23, 7:51 AM PAS 12 & PAS 19
Short-term employee benefits shall be recognized as expense (or *1/1

included within the cost of an asset, e.g. inventory) within the period
when
the employee is hired
the employee has rendered the related services
upon termination of contract
the employee receives his/her paycheck
6/22/23, 7:51 AM PAS 12 & PAS 19
* 1/1
768,000
288,000
96,000
480,000
6/22/23, 7:51 AM PAS 12 & PAS 19
the profit (loss) for a period, determined in accordance with the rules *1/1
established by the taxation authorities, upon which income taxes are
payable (recoverable).
Accounting Income
Taxable Income
Income Tax Expense
Deferred Tax Assets
6/22/23, 7:51 AM PAS 12 & PAS 19
employee benefits, other than termination benefits, that are expected to *1/1
be settled wholly before 12 months after the end of the annual period
after the employees render the related service
Employee Benefits
6/22/23, 7:51 AM PAS 12 & PAS 19
If the income tax is 30%, what amount should be reported as deferred tax *1/1
liability at year-end?
30,000
45,000
75,000
6/22/23, 7:51 AM PAS 12 & PAS 19
A deferred tax asset represents the decrease in taxes payable future *1/1
years as a result of deductible temporary differences existing at the end
of the current year.
True
False
6/22/23, 7:51 AM PAS 12 & PAS 19
What amount should be reported as actuarial gain or loss for the year? * 1/1
350,000 loss
150,000 gain
150,000 loss
500,000 gain
6/22/23, 7:51 AM PAS 12 & PAS 19
These are all forms of consideration given by an entity in exchange for *1/1
service rendered by employees or for the termination of employment.
Salaries and wages
Employee benefits
Compensated absences
Payment and accrual
6/22/23, 7:51 AM PAS 12 & PAS 19
What amount was reported as vacation pay expense in 2019? * 0/1
388,000
324,400
361,200
Correct answer
6/22/23, 7:51 AM PAS 12 & PAS 19
361,200
are the amounts of income taxes payable in future periods in respect of *1/1
taxable temporary differences.
Accounting Income
Taxable Income
Income Tax Expense
Deferred Tax Assets
6/22/23, 7:51 AM PAS 12 & PAS 19
The present value of a ___________ is the present value, without *···/1

deducting any plan assets, of expected future payments required to
settle the obligation resulting from employee service in the current and
prior periods.
termination benefits
defined benefit obligation
separation pay
vesting compensated absences
No correct answers
6/22/23, 7:51 AM PAS 12 & PAS 19
Brown reported pretax financial income of 6,200,000 for the current year. *0/1
Included in other income was 200,000 of interest revenue subject to final
tax. The income statement included depreciation expense of 500,000 for
machine with the cost of 3,000,000. The income tax return reported
600,000 as depreciation on the machine. The enacted tax rate is 30% for
the current year and future years. What is the current tax expense for the
current year?
1,830,000
1,770,000
1,860,000
1,800,000
Correct answer
1,770,000
6/22/23, 7:51 AM PAS 12 & PAS 19
What is the balance of the defined benefit liability/asset on December 31? *1/1
3,100,000 liability
2,100,000 asset
2,100,000 liability
5,200,000 asset
6/22/23, 7:51 AM PAS 12 & PAS 19
Examples of taxable temporary differences are subscriptions received in *1/1

advance and advance rental receipts where tax is computed through cash
basis.
True
False
These are employee benefits, other than termination benefits and short- *1/1
term benefits, that are payable after the completion of employment
plan assets
defined benefit contribution
insurance claims and settlement
6/22/23, 7:51 AM PAS 12 & PAS 19
July Company has an employee benefit plan for compensated absences *0/1
that gives its 20 employees 12 paid vacation days and 12 paid sick
leaves. Vacation days can be carried over indefinitely and employees can
elect to receive payment in lieu of vacation days. However, no payment is
given for sick days not taken and they cannot be carried over for the next
period.
The entity estimated that there was an accumulated 110 unused vacation
days and 15 unused sick days at yearend. The employees earn an
average of P1,000 per day. At yearend, what amount of liability for
compensated absences is required to be reported?
240,000
110,000
480,000
125,000
Correct answer
110,000
6/22/23, 7:51 AM PAS 12 & PAS 19
On December 31, 2020, ABC Company paid P400,000 contribution to a *0/1

defined contribution plan. Of this amount, P350,000 is in part exchange
for services performed by employees for 2020, and the balance is in
respect of services to be performed in 2021. In recording this transaction
in 2020, this will include:
A credit to Accrued Post Employment Benefit Cost of P50,000
A debit to Prepaid Post Employment Benefit Cost of P50,000
a credit to Post Employment Expense of P350,000
a debit to Post Employment Benefit Expense of P400,000
Correct answer
A debit to Prepaid Post Employment Benefit Cost of P50,000
6/22/23, 7:51 AM PAS 12 & PAS 19
If the income tax is 30%, what amount should be reported as deferred *1/1
tax asset at yearend?
30,000
45,000
75,000
6/22/23, 7:51 AM PAS 12 & PAS 19
What is value of the defined benefit obligation at yearend? * 0/1
P3,260,000
P1,317,000
P4,410,000
P2,390,000
Correct answer
6/22/23, 7:51 AM PAS 12 & PAS 19
P1,317,000
Future deductible amounts cause taxable income to be greater than *0/1

pretax financial income in the future as a result of existing temporary
differences.
True
False
Correct answer
False
6/22/23, 7:51 AM PAS 12 & PAS 19
August Company provided the following information pertaining to the *0/1

defined benefit plan for the current year:
Projected benefit obligation on January 1 P6,200,000 Assumed discount
rate 10%
Current Service Cost 1,000,000
Past Service Cost 200,000
Pension benefits paid 1,500,000
If no change in actuarial estimate occurred in the current year, what is the
amount of defined benefit obligation on December 31?
9,520,000
6,520,000
8,900,000
6,490,000
Correct answer
6,520,000
6/22/23, 7:51 AM PAS 12 & PAS 19
What is amount of retirement benefit cost to be reported under profit or *1/1

loss at yearend?
P400,000
P688,000
P570,000
P790,000
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6/22/23, 7:51 AM PAS 12 & PAS 19
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6/22/23, 7:51 AM PAS 12 & PAS 19
6/22/23, 7:51 AM PAS 12 & PAS 19
6/22/23, 7:51 AM PAS 12 & PAS 19
6/22/23, 7:51 AM PAS 12 & PAS 19

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6/22/23, 7:51 AM PAS 12 & PAS 19

PAS 12 & PAS 19 Total points 48/59

Deferred tax assets/liabilities are offset with current tax assets/liabilities

Deferred tax assets and liabilities shall be classified as noncurrent.

Income Tax Expense

Income Tax Expense - Curent

Deferred Tax Liability

Deferred Tax Assets

Non-accumulating absences * 1/1

Current tax expense plus deferred tax expense is * 1/1

Income tax expense

Tax deductible expense

What is the balance of the defined benefit liability/asset on January 1? * 0/1

Short-term Employee Benefits

Other Long-term employment Benefits

The exposure to risk is borne by the employee

There is a defined or fixed amount of contribution into a fund

compensated absences that cannot be carried forward on the next *1/1

Short-term Employee Benefits

Other Long-term employment Benefits

short-term employee benefits

What is value of plan assets at yearend? * 1/1

P14,000 income tax expense - deferred

P15,000 income tax expense - deferred

P17,500 income tax expense – deferred

P18,000 income tax expense - deferred

employee benefits provided in exchange of the termination of an *1/1

Short-term Employee Benefits

Other Long-term employment Benefits

pre-tax profit computed based on accounting standards and Conceptual *1/1

Income Tax Expense

Income Tax Expense - Curent

Deferred Tax Liability

Deferred Tax Assets

What amount should be reported as accrued liability on December 31, *0/1

What amount should be reported as retirement benefit expense in *0/1

Income Tax Expense

Income Tax Expense - Curent

Deferred Tax Liability

Deferred Tax Assets

the amount of income taxes payable (recoverable) in respect of the *1/1

Income Tax Expense

Income Tax Expense - Curent

Deferred Tax Liability

Deferred Tax Assets

net defined benefit liability (asset)

Short-term Employee Benefits

Other Long-term employment Benefits

The deferred tax consequence attributable to a deductible temporary *1/1

deferred tax asset

income tax expense

deferred tax liability

An employee benefit is classified as ______ if it is expected to be settled *1/1

short-term employee benefits

other long-term employee benefits

effective interest method

projected unit credit method

straight line method

P180,000 deferred tax liability