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Trial balance entries:
Income tax $3,400,000 (Credit side)
Deferred tax $18,780,000 (credit side)The estimated income tax on the current year’s profits is $18 million. The provision for deferred tax should be $12 million, the balance in the trial balance is an overprovision of tax relating to the preceding year. Calculate the income and deferred tax entries for the Statement of Profit and Loss and the Statement of Financial Position in the current year.
Please help me when the entries to put in the Statement of Proft and Loss and the Statement of Financial Position
Hi,
The statement of financial position will show the estimate of the current year tax within current liabilities. There will also be the deferred tax position at the reporting date too.
The statement of profit or loss shows the tax charge, being the current tax adjusted for any under/over provision and the movement in the deferred tax balance.
Now that you have the basics, try and use this to answer the question above. Once you’ve had a go, let me know your answer and then I can tell you if you are right or wrong. If you’re wrong then I’ll correct you.
Thanks
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