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IAS 12 NEED HELP SOS

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › IAS 12 NEED HELP SOS

  • This topic has 2 replies, 2 voices, and was last updated 3 years ago by P2-D2.
Viewing 3 posts - 1 through 3 (of 3 total)
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    Posts
  • August 11, 2021 at 5:54 pm #631247
    chelleyness
    Participant
    • Topics: 2
    • Replies: 2
    • ☆

    Jasper Orange Co’s trial balance at 31 Dec 20X3 shows a debit balance of $700,000 on current tax and a credit balance of $8,400,000 on deferred tax. the directors have estimated the provision for income tax for the year at $4.5 million and the required deferred tax provision is $5.6 million, $1.2 million of which relates to property revaluation.

    What is the tax liability recognized in Jasper Orange Co’s statement of financial position for the year ended 31 Dec 20×3?

    I have difficulty sorting out the T account, please assist me on that, especially this part “the directors have estimated the provision for income tax for the year at $4.5 million and the required deferred tax provision is $5.6 million, $1.2 million of which relates to property revaluation.”
    The answer to this question is $1.2million.
    Thankyou

    August 12, 2021 at 9:37 am #631312
    chelleyness
    Participant
    • Topics: 2
    • Replies: 2
    • ☆

    I have figured out the T accounts for both current tax and deferred tax. but i would like to know why do we debit $5.6m of deferred tax provision in deferred tax T account? and debit $4.5m in current tax account too?

    August 19, 2021 at 9:47 pm #632260
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7171
    • ☆☆☆☆☆

    The two figures that you mention are the closing figures for the period and are both credit balances at the start of the next period. It is therefore the case that the carried forward balances will be on the debit side when we balance off the T-account at the end of the reporting period.

    Thanks

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