Page 34 - PowerPoint Presentation

INCOME TAXES

Advances - example

• Revenue received in advance is not accounted in the statement of profit or loss

and other comprehensive income in the current year, but disclosed as a liability in
the statement of financial position

• debit – Bank;

• credit – Revenue received in advance

• The amount is taxable in the current year since all amounts received or accrued

are taxed according to the rules of the Income Tax Act.

• A company has been incorporated in the current year and has received deposits in

advance to the amount of R20 000 from their customers to book holiday
accommodation.

• The accounting profit of the company amounted to R150 000 for the year ended

31 December 20.12 and the tax rate is 28%.

• Deferred tax is provided on all temporary differences according to the statement

of financial position approach. There is assurance beyond reasonable doubt that
there will be sufficient taxable profit in the future to realise any tax benefits.

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