ACCA FR Syllabus B. Accounting For Transactions In Financial Statements - Current Tax - Notes 1 / 2
This is a simple tax payable
Dr Tax (I/S)
Cr Tax payable (SFP)
Let's say we did this - and the amount was 100
This is paid after the year end, however there were adjustments still to be made and we ended up paying 110
The problem is that the accounts have already been published
So the extra 10 has to go in the following year
This is an UNDER provision of tax
Under Provisions look like this on the trial balance in question 2
| Trial Balance | Debit | Credit |
|---|---|---|
| Tax | 10 |
Over Provisions look like this on the trial balance in question 2
| Trial Balance | Debit | Credit |
|---|---|---|
| Tax | 10 |
How to deal with an under provision
in the trial balance
Add it to tax on I/S
How to deal with an over provision
in the trial balance
Take it away from tax on I/S
How do you deal with the tax payable for the year
Add it to tax on (I/S)
Create a tax payable (SFP)