Hi Sir, could you please assist on this question if my working is correct or not.
At 1 January 20X5, Carbon Co had a credit balance on its income tax account of $2,300,000.
For the year ended 31 December 20X5, Carbon Co estimated that its income tax liability to
be $2,400,000. During 20X5, the income tax liability for the previous year was settled at
$2,350,000.
What was the income tax charge in the statement of profit or loss for the year ended
31 December 20X5?
1 January 20X5 - Credit Balance in Tax expenses $2,300,000.
Payment made:
Dr Tax Payable $2,350,000.
Dr Tax Expense $ 50 000
Cr Cash $2,300,000
Estimated :
Dr Tax Expenses $2,400,000
Cr Tax Payable $2,400,000
Tax Payable
Cash 2,300,000. ll Expense 2400 000
B c/f 50 000
Tax Expense
Payable 50 000 ll
Payable 2400 000 SPL 2350 000
Ask the Tutor ACCA FA
Income Tax
4y ago#1I don't know why you are spending time writing all these entries, because in the exam you would not need them - all you would need would be the final expense in the SOPL and/or the amount owing in the SOFP.
The expense in the SOPL will be the 2,400,000 estimated liability for the current year plus the 50,000 that had been under-accrued in the previous year. So a total expense of 2,450,000.
The amount showing as owing in the SOFP will be the 2,400,000 estimated for the current year.
okay, Mr John, i manage to get it and pass the exam!
Thank you for your assistant and notes
4y ago#3You are welcome :-)
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