Procurement Management

3Accounting for Income Tax

Corporate Reporting (Accounting for Income Tax)

Procurement Management

Accounting for Income Tax

ALEX LTDTAXABLE INCOME

Income before tax

$ 18,500.00

Depreciation

Motor Vehicle

$ 4,500.00

Equipment

$ 20,000.00

$ 24,500.00

Additional Income

Rent Revenue

$ 16,000.00

Sale of equipment

$ 19,000.00

Carrying amount on equipment sold

$ 18,000.00

$ 53,000.00

$ 96,000.00

Non Taxable income

Royalties revenues

$ (5,000.00)

Doubtful debt expenses

$ (2,300.00)

Entertainment expenses

$ (1,500.00)

Annual leave expenses

$ (5,000.00)

$(13,800.00)

Taxable income

$ 82,200.00

The company is tax at 30% of the total taxable income and this will give

The net taxable income will be current taxable income less loss from sale of the assets

82200-11000 = 71,200

Tax = 30%*71,200

Actual tax = $ 21, 360 -$ 15,000 (Tax claim for depreciation)

Current tax = $6,360

Dr. Tax due $ 6,360

Cr. Cash $ 6,360

recognize the current tax as at 30 June 2016).(To record and

Deferred tax worksheet

Deferred tax b/d $ 6450

$ 6,360Current tax

The total deferred tax account $12,810

Recording he deferred tax Journal’

Dr. Tax payable $ 12,810

Cr. Deferred tax $ 12,810

(This is to record deferred tax adjustment for the year ending 30 June 2016)

It can be seen that there is increase in the deferred tax account)