Tax exercises

Question 1

How to we account for this?

1. Acc > Tax
2. Acc. < Tax
3. Current Tax(tax) < Tax Expense (normal depr.)

Answer 1

1. DR DTE CR DTL | Expense
2. Dr DTL Cr DTI | (Income)
3. Expense in deferred tax

Question 2

What are the accounting entries

Company must pay 2 million tax. It paid 1.2 million during the year.

Answer 2

DR Current income tax expense 2. million
CR cash 1.2 million
CR current tax liability 0.8 million

Question 3

If deferred tax charge ist positive or negative what are the accounting entries?

Answer 3

Positive: Dr DTE CR DTL (acc> tax)
Negative: DR DTL CR DTI (acc < tax)