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- This topic has 3 replies, 2 voices, and was last updated 8 years ago by John Moffat.
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- September 13, 2016 at 11:56 am #340319
Astral Co has a debit balance relating income tax of $500 included in its trial balance extracted on 30 June 20×4. Astral estimated that his income tax liability for the year ended 30 June was $8000
I made a T account
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Balance b/f 500 ]
Balance c/f 8000So the amount I charged to the SOPL was 8500, but I dont know what to put in SOFP. ANd what is the overprovision here
]September 13, 2016 at 1:24 pm #340331The amount in the SOFP will be a liability of $8,000.
The amount in the SOPL is 8,500 (which is the expense this year of 8,000 plus the under-provision last year of 500. There is no over provision)
September 14, 2016 at 8:16 pm #340538But the income tax a debit balance! should it not be that the business has paid too much and thus an overprovision
September 14, 2016 at 9:02 pm #340554The debit balance occurred because they had had to pay more tax than they expected that they were owing.
So the had not provided enough – an under provision. - AuthorPosts
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