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  • Tax Calculation

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    Sri Basava
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    The document provides instructions for calculating income tax provision using information from a trial balance and notes. The reader is told to take the income tax provision from the notes, add or subtract the income tax from the trial balance depending on whether it is a debit or credit, and adjust the provision by the difference between the deferred tax liability in the notes and trial balance by adding or subtracting the difference. The reader is also informed that if no deferred tax liability is provided, they can calculate it from any temporal differences given using the tax rate.

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    The document provides instructions for calculating income tax provision using information from a trial balance and notes. The reader is told to take the income tax provision from the notes, add or subtract the income tax from the trial balance depending on whether it is a debit or credit, and adjust the provision by the difference between the deferred tax liability in the notes and trial balance by adding or subtracting the difference. The reader is also informed that if no deferred tax liability is provided, they can calculate it from any temporal differences given using the tax rate.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    4 views1 page

    Tax Calculation

    Uploaded by

    Sri Basava
    The document provides instructions for calculating income tax provision using information from a trial balance and notes. The reader is told to take the income tax provision from the notes, add or subtract the income tax from the trial balance depending on whether it is a debit or credit, and adjust the provision by the difference between the deferred tax liability in the notes and trial balance by adding or subtracting the difference. The reader is also informed that if no deferred tax liability is provided, they can calculate it from any temporal differences given using the tax rate.

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    © All Rights Reserved
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    Published accounts

    Atlas statement of profit or loss and other comprehensive income for 31 mar 20X3

    Revenue 550,000

    From the notes find the income tax provision required for the year and then go to the trial balance
    and find the income tax in the trial balance. If the income tax in the trail balance is on the debt side,
    you add it to the provision. If it is on the credit side, you subtract from the provision.

    Go back to the notes and find the deferred tax liability and compare the deferred tax liability in the
    notes with the deferred tax in trail balance. If the deferred tax liability in the notes is higher than
    that of the trail balance, the difference between the two, you add to the provision. If the deferred
    tax in the notes is lower than the deferred tax in the trail balance, the difference between the two
    you subtract from the provision.

    The question may not give the deferred tax in the notes but you may be given the temporal
    difference. The temporal difference is the difference between assets carrying amount and its tax
    base. Calculate the differed tax by multiplying the temporal difference times the tax rate.

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