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what will be the solution of this question. I know that $64,500 tax will be charged on SOCI. But what will be the effect on SOFP?
Florabundi, a limited liability company, shows an over provision of $3400 on its tax liability account at the end of the year ended 31 December 20X8 before accounting for that year’s tax charge.
It estimates tax on profits for the year to be $67,900.
what amounts should be should be shown in the financial statements for the year ended 31 December 20X8 in respect of tax?
SOCI SOFP
A.$67900 tax charge $67,900 Tax payable
B.64,500 tax charge $ 64,500 Tax payable
C.64,500 tax charge $67,900 Tax payable
D.71,300 tax charge $67,900 Tax payableSurely you have an answer in the same book in which you found the question? You should use this forum to ask about whatever it is in the answer that you are not clear about.
The amount owing on the SOFP will be $67,900
Hello, then what happens to the over-provision?does it affect SOCI or SOFP?if so what adjustments are needed for both SOCI AND SOFP?
The first line of the original question, together with my reply, answers your question!
Last years over-provision reduces the charge this year in the SOCI, so the charge is 67,900 – 3,400 = 64,500.
The amount owing in this years SOFP is the tax for this year of 67,900.
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