Homework Answers
Solution (a)
On the basis of the available information, following is a statement for computation of reconciled financial income and tax payable for 2017, 2018 and 2019
| Reconciliation schedule for deternining financial income and tax payable | |||
| Particulars | 2017 | 2018 | 2019 |
| Pretax financial income | $ 6,04,000.00 | $ 8,15,000.00 | $ 2,40,000.00 |
| Add: Depreciation as per books | $ 1,60,000.00 | $ 1,60,000.00 | $ 1,60,000.00 |
| $ 7,64,000.00 | $ 9,75,000.00 | $ 4,00,000.00 | |
| Less: Depreciation as per tax purposes | $ -2,64,000.00 | $ -3,60,000.00 | $ -1,20,000.00 |
| $ 5,00,000.00 | $ 6,15,000.00 | $ 2,80,000.00 | |
| Add: Prepaid Rent adjusted as per books | $ - | $ 2,40,000.00 | $ - |
| $ 5,00,000.00 | $ 8,55,000.00 | $ 2,80,000.00 | |
| Less: Rental expenses reported as tax deduction | $ - | $ -3,60,000.00 | $ - |
| Taxable Income | $ 5,00,000.00 | $ 4,95,000.00 | $ 2,80,000.00 |
| Tax Payable @ 40% | $ 2,00,000.00 | $ 1,98,000.00 | $ 1,12,000.00 |
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