Acca financial Accounting (FA) Study Text ac ca (FA)

 

Test your understanding 8 

Choc Co estimated last year’s tax charge to be $230,000. Choc Co's tax 

advisor settled the amount due with the tax authorities at $222,000. The 

difference arose because Choc Co's financial statements were submitted 

sometime before the tax computation was finalised. Therefore the 

directors had to make a prudent estimate of the potential tax liability to 

include in the financial statements. 

This year, Choc Co estimated its tax bill to be $265,000, but it is a little 

confused as to how this should be reflected in the financial statements.