Page 263 - F1 Integrated Workbook STUDENT 2018
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IAS 12 Income taxes
1.3 Under/over-provisions
In the following period the income tax will be paid but it is unlikely that the exact
amount provided for will be the same as the amount paid. This will result in an
under/over-provision. This must be adjusted for in the current accounting period.
Under-provision = more tax is paid than provided for in the previous accounting
period. e.g. Liability $20,000 and a payment of $21,000 will result in a debit balance
in the trial balance on the tax account. This under provision must be added to the
current tax expense in the SP&L.
Over-provision = less tax is paid than provided for in the previous accounting
period. e.g. Liability $20,000 and a payment of $19,000 will result in a credit balance
in the trial balance on the tax account. This under provision must be deducted from
the current tax expense in the SP&L.
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