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November 28, 2019 at 6:42 pm
The quiz hasn’t been helpful because the workings aren’t clear and this isn’t part of the notes
June 9, 2020 at 11:27 am
hello Why there are no explanations!?
November 24, 2019 at 2:03 pm
Sir i have a query in question 5 i couldn’t understant whether 20X13 is prior year or 20 x2 is prior year.
September 24, 2019 at 1:13 am
Please guide me on qn3. 1.How do u get the 400,000 in current tax account?
November 20, 2019 at 2:55 am
I got 4,150,000
November 20, 2019 at 2:56 am
I dont know how they got 400,000 my final answer was 22,750,000 which is one of the options
March 4, 2020 at 4:23 am
CURRENT PROVISION – 6750 OVER PROVISION – (2600) PROVI FOR REVAL – (3750) =400
May 4, 2019 at 8:58 am
I’d like to ask about the solution to question 4 in the above Practice Questions on Income taxes. All the entries are clear for me except one. In the answer there is 60 current tax debit – why is it debit and not credit? I suppose that 60 on current tax a/c represents a movement from Deferred tax a/c “transfered” to Current Tax a/c to arrive at the tax paid. But, the balance on deferred tax a/c has actually increased (and not decreased) by 60 so there is 60 more credit on deferred tax a/c – shouldn’t it therefore be also a credit on current tax acc if we “transfer” it?
Please let me know where I am wrong. Thank you in advance.
February 5, 2019 at 6:44 am
OK Autumn, now we’re getting somewhere!
However, what you have now sent is a complete record of the answer (maybe!)
Does your original question still apply? You asked “why does the tax expense for the current year appear as a Dr and not as a Cr in the Current Tax Account?”
According to your most recent post, the only debits in the Current Tax Account are the brought forward and carried forward figures (2,450 and 7,130)
I’m not at all convinced that you have correctly copied from an answer – I’m more inclined to believe that what you have posted is your own effort at answering this question! Am I correct?
The crucial point in this question is in the line “Tax liability for the current year has been estimated at 8,470”
You need to be aware that there is a BIG difference between the expressions “tax liability” and “tax charge” (also referred to sometimes as “tax expense”)
The tax liability is the figure that appears BELOW the total lines of a T Account and, being a liability, it’s on the credit side below the lines with the narrative “Brought down”
That being so, there must be a corresponding entry for the same amount on the debit side ABOVE the total lines with the narrative “Carried down”
The “Tax expense” / “Tax charge” is the amount that is double entered as a debit in the Statement of Income and a credit in the Current Tax T Account and is the figure that is calculated following the tax rules that are explained in detail in the lectures on this site for the Tax Paper (formerly known as F6)
IF you have copied the answer correctly, then the question should have read “The tax EXPENSE for the current year has been estimated …” and, in that case, your post is correct.
But that then is not consistent with your original question “Why is the tax liability shown as a debit?” because, according to your post, it isn’t!
IF the post is your effort, and if you have correctly replicated the question, the entries in the two T accounts for Deferred Tax and for Current Tax should be as follows:
Current Tax (balancing figure) 1,110 Carried forward (per question) 2,100
Deferred Tax credits
Brought forward (per question) 3,210
Current Tax debits
Brought forward (per question) 2,450 Carried forward (per question) 8,470
Current Tax credits
From balancing figure in Deferred Tax 1,110 Tax charge to Statement of Income (balancing figure) 9,810
NOW we see the tax liability on the debit side of the Current Tax Account being carried forward onto the credit side
Is that any better?
PS I hadn’t realized that this was a quiz question from the end of the chapter – if I had realized I could have saved you a lot of trouble typing it all out. Sorry!
February 5, 2019 at 8:22 pm
Thank you for the explanation. The workings make more sense and I understand where I was going wrong. You were correct in assuming that I had posted my attempt at the answer.
Thanks again for the help!
February 6, 2019 at 6:23 am
June 9, 2020 at 11:32 am
no explanations! or maybe some data are missing?
February 3, 2019 at 9:48 am
I think that I have got a bit confused. Please could anyone explain why the tax expense for the current year appears as a Dr rather than a Cr in the current tax T account
I have placed my workings below;
Tax Expense Current Tax Deferred Tax ___________________________________ __________________________ __________________________ Dr Cr Dr Cr Dr Cr
Current Yr ex 8470 Bal. b/f 2450 Bal. b/f 3210 Current Yr Ex 8470 DTL(W1) 1110 DTL (W1) 1110
Bal. c/f 7130 Bal. c/f 2100 _____ ______ _____ _____ 9580 9580 3210 3210
Temporary Difference = 7000
7000*0.3 = 2,100
Closing Deferred Tax Liability 2100 Opening Deferred Tax Liability (3210) _____ (1100)
February 3, 2019 at 4:39 pm
This is very difficult to work out which figures fit into which accounts
Please retype withCurrent Tax Account debits
Then Current Tax Account credits
Then Deferred Tax Account debits
Followed by Deferred Tax Account credits
In addition, please give the information about the tax charge for the year (from the question) and any other information that there is in the question relating to tax
THEN I can maybe help you
February 4, 2019 at 7:23 pm
Please accept my apologies, the previous workings did not send as intended. This question relates to question 1.
Information from Question: trial Dr balance on Current Tax account 2,450 trial Cr balance on Deferred Tax account 3,210
Tax liability for the current year has been estimated at 8,470 Net assets have a carrying value of 7,000 greater than their tax base Corporate Income tax rate is 30%
Current Tax account debits Bal. b/f 2450 Bal. c/f 7130
Current Tax account credits Current Year Tax Expense 8470 Deferred Tax Liability (W1) 1110
Defferred Tax Account Debits Deferred Tax Liability (W1) 1110 Bal. c/f 2100
Deferred Tax Credits Bal. b/f 3120
Tax Expense Debits Current Year Tax Expense 8470 W1.
Closing Deferred Tax Liability 2100 Opening Deferred Tax Liability (3210) Deferred Tax Moevement (1100)
Thank you for your help in advance, it is much appreciated.
August 16, 2018 at 10:32 pm
Apart from the last question, none of these were in the lectures or the notes. Are these possible questions to come up?
November 17, 2018 at 8:57 am
I’ll leave it here so I get notified.
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