[Mykhailo]

Yep, all clear)

Sorry, for such misleading layout. By SFP 10, I meant to say that 10 will go to Revaluation Surplus in Equity Section.

Mike, I appriacate your time and effort for answering my and other members questions.
Thanks!

[Mykhailo]

Maybe you right!

About under/over-provision the are no problem, but thanks for the tip 😉

[Mykhailo]

I read you comment before writing. As you saw in my previous post I tried to make T account, but it display wrong.

My problem that I understand that under-provision will increase my tax expenses, but I cann’t figure out how to see this in T account?

Also you say that: “The double entry for that last 7,700 entry in the credit side of the tax account is a debit entry in the Statement of Income”
So in this case Dr P&L 300 Cr ??

Sorry, for inconvenience. Thanks!

[Mykhailo]

Hi!

I understand part about over/under-provision, but I still confused on the adjustment necessary at the end of year.

Example:
Income Tax Dr 100 (under-provision)
Tax Estimate 1,000 at the end of the year

(1) Income tax 100 under-provision
(2) Tax c/f 1,000
(3) Tax liability 1,000
(4) Charge to P&L

___________Tax at the end of the year______________
Dr (1) 100 b/f | Cr (3) 1,000
Dr (2) 1,000 c/f | Cr (4) 100
________________________
Dr 1,100 | Cr 1,100
___________Tax at the next year opening___________
Cr b/f 1,000

So, if I understand correctly after the end of the year provision for the year was estimated 1,000, therefore, we made transaction
Dr Exp. 1,000 Cr Tax Liability 1,000

Where did Dr 1,000 c/f came from?
And what transaction will be for adj. Dr P&L Cr Tax liability?

Thanks in advance!

[Author]

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