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taxable temporary deifference

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › taxable temporary deifference

  • This topic has 3 replies, 2 voices, and was last updated 9 years ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • October 5, 2015 at 2:51 am #274969
    mansoor
    Participant
    • Topics: 424
    • Replies: 542
    • ☆☆☆☆

    an example given is a follows:

    “sale of goods revenue is included in the accounting profit when the goods are delivered, but only included in taxabale profit when cash is received”

    i thought sale of goods is booked as either a debit to Trade Receivables or Cash, and a credit to Revenue. which means that the revenue will have been taxed.

    so why the temp diff??

    October 6, 2015 at 12:58 pm #275163
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23327
    • ☆☆☆☆☆

    Because, in working out the liability for taxation, adjustment will be made to the accounting results to arrive at the taxable profits and then the tax rate is applied to those profits subject to corporation tax

    The example you have quoted is precisely illustrating the temporary difference where the taxman is working on a cash basis whereas for accounting purposes we work on an accruals basis

    OK?

    October 6, 2015 at 2:43 pm #275186
    mansoor
    Participant
    • Topics: 424
    • Replies: 542
    • ☆☆☆☆

    great. thanks.

    October 6, 2015 at 2:46 pm #275188
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23327
    • ☆☆☆☆☆

    You’re welcome

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