Income tax

The double entries for recognizing current year income tax is:

Dr income tax..../Cr income tax....

Which of the following would be added to the income tax expense of the year?

• Tax charge for the current year

• Under/Over tax provision of previous year

• Increase/Decrease in deferred tax

• All of the above

Which one is the correct double entry for over tax provision?

• Dr Income tax expense/Cr Income tax payable

• Dr Income tax payable/Cr Income tax expense

• Dr Deferred tax liability/Cr Income tax expense

• Dr Deferred tax asset/Cr Income tax expense

If income tax in 20X7 is $30,000 and the tax due on 20X7 profits was subsequently agreed with the tax authorities as $35,000. It should be recognized as...

• A over provision of $5,000

• A decrease in tax payable of $5,000

• A decrease in current tax of $5,000

• An under provision of $5,000

The permanent differences occur when...

• there are differences between the carrying amount of an asset in the statement of financial position and its tax base

• items of revenue or expense are included in both accounting profits and taxable profits, but not for the same accounting period

•  items of revenue or expense are excluded from the computation of taxable profits

• there are differences between the carrying amount of a liability in the statement of financial position and its tax base

Deferred tax asset occur when...

• The carrying amount of the asset is higher than its tax base

• The carrying amount of the asset is less than its tax base

The property has the carrying amount of $40,000 and the tax base of $30,000. Tax on temporary difference is $3,000. This should be recognized as...

• A deferred tax asset

• A deferred tax liability