Reference no: EM132888820

On January 1, 2012, Easy Company acquired an equipment for P8,000,000. The equipment is depreciated using straight line method based on a useful life of 8 years with no residual value. On January 1, 2015, after 3 years, the equipment was revalued at a replacement cost of P12,000,000 with no change in the useful life. The pretax accounting income before depreciation for 2015 is P10,000,000. The income tax rate is 30% and there are no other temporary differences at the beginning of the year.

Problem 1: What is the deferred tax liability on January 1, 2015 arising from the revaluation?

Problem 2: What is the current tax expense for the current year?

Problem 3: What is the deferred tax liability on December 31, 2015 arising from revaluation?

Problem 4: What is the total tax expense for the current year?

Problem 5: What is the revaluation surplus on December 31, 2015?