Good Day,
Please assist me with this mini question, as I am unable to arrive at the answer given.
Trial balance extract at 30 September, 2008
Income tax (credit balance) 400
Deferred tax liability 11,200
The balance of income tax in the trial balance represents the under/over provision of the previous year’s estimate. The estimated income tax liability for the year ended 30 September 2008 is $18.7 million. At 30 September 2008 there were $40 million of taxable temporary differences. The income tax rate is 25%.
Note: you may assume that the movement in deferred tax should be taken to the Statement of
Profit or Loss.
ACCA Forums
FRDeferred and Income Tax
Deferred opening balance 11 200
Deferred closing balance 25%*40 000 = 10 000
Income Statement transfer (1 200)
Tax for year 18 700
Cr over provision (400)
Transfer (1 200)
17 100
Deferred tax in SFP 10 000
Tax in SPL 17 100
is this right?
12y ago#2Deferred Tax $
Opening balance 11 200
Transferred to current income tax (1 200)
-----------
Closing balance ($40 000 X 25%) 10 000
-----------
Current Income tax expense
$
Current year estimate 18 700
Deferred tax transfer (1 200)
Prior year over-provision ( 400)
------------
Current year expense (I/S) 17 100
-------------
Note that :-
(a) A credit balance in the trial balance of a current tax is an over-provision made in the prior year and should be subtracted in order to determine the current year tax expense to be charged in the profit or loss statement.
(b) A debit balance is an under-provision and should be added when calculating the current year tax expense.
12y ago#3Deferred Tax $
Opening balance 11 200
Transferred to current income tax (1 200)
-----------
Closing balance ($40 000 X 25%) 10 000
-----------
Current Income tax expense
$
Current year estimate 18 700
Deferred tax transfer (1 200)
Prior year over-provision ( 400)
------------
Current year expense (I/S) 17 100
-------------
Note that :-
(a) A credit balance in the trial balance of a current tax is an over-provision made in the prior year and should be subtracted in order to determine the current year tax expense to be charged in the profit or loss statement.
(b) A debit balance is an under-provision and should be added when calculating the current year tax expense.
Hello,
Can anyone help me with this question?
-“-“-
For the year ended 31 july 2011 Norman made taxable trading profit of $1200000 on which income tax is payable at 30%..
a) A transfer of $20000 will be made to deferred taxation account. The balance on this account was $100000 before making adjustments for items listed in this paragraph.
b) The estimated tax on profits for the year ended 31 July 2010 was $80000, but tax has now agreed at $84000 and fully paid.
c) tax on profits for year 31 July 2011 is payable on 1 may 2011.
Required:
1) tax charged for 1 may 2012
2) tax liability in sfp at 31 july 2011
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