Medium-term income tax accounting treatment

Abstract: The interim financial report is to adapt the frequency of information disclosure, improve the company's information, especially financial information and related decision-making arising from the article discusses the interim financial report on the accounting treatment of medium-term income to the tax impact on the actual case accounting method, income tax accounting treatment medium is described in detail.

Keywords: mid-income, accounts processing, tax effect accounting method

Whether in view of the next one, or an independent advocate in the medium term outlook are confirmed under the mid-income tax, the reason for this is: Although the annual income to the end of the balance sheet date to be calculated, but it is actually business gradually throughout the year earned, as required in the calculation of the interim financial report on income, so in order to achieve the ratio of income and expenses, in the interim financial report on the income tax expense should be recognized.

How to calculate the medium-term income tax, the international concept of the integration is taken, the medium-term fiscal year as a whole an integral part of the calculation of income tax in the medium term are expected to consider the case of the year. Specifically, this: the company must first the end of the year estimated effective tax rate, and then to calculate the medium-term income tax expense and deferred income tax assets or liabilities, the amount of such International Accounting Standard 34 - "Interim Financial Reporting>> states: income tax should be confirmed in each medium , should be confirmed in the whole financial year based on expected weighted average using the best estimate income tax rate if the annual income tax rate changes in a medium amount of income tax expense recognized in the financial year may need to be adjusted mid-follow-up.

Interim income tax is calculated as follows: Estimated annual pre-tax income (loss, estimated annual income tax expense; the calculation of annual effective tax rate: The annual estimated annual effective tax rate = income tax expense (estimated annual pre-tax profit ÷ Income (loss, calculated from the beginning The income tax payable in the period: in the beginning to the end of the income tax payable = to the beginning of the end of the taxable income × expected annual effective tax rate, calculated in the beginning to the end of the deferred income tax liabilities or assets: in the beginning to the end = deferred income tax liabilities or assets in the beginning to the end of this timing difference × annual effective tax rate, calculated in the beginning to the end of the income tax expense (benefit: in the beginning to the end of the income tax expense (benefit = beginning to the end of the income tax payable in + beginning to the end of the period in deferred income tax liabilities (or by the end of this year to deferred income tax assets, the calculation of the interim tax expense (benefit: The mid-term tax expense (benefit = the end of this year to income tax expense (benefit) - the beginning first one in the end recognized income tax expense (benefit.

In theory, the interim income measurement method is more reasonable, but the need for full-year effective tax rate is expected, subjective, and the calculation process is more complex, prone to calculate the tax amount is not reliable, or loss of control by the tax situation .

China <<Accounting Standards for Enterprises - Interim Financial Reporting>> did not use the above approach, but using an independent view of the principles of recognition and measurement of medium-term income tax of the specification, ie medium-term income recognition and measurement methods should be compared with the annual financial statements consistent.

As China's current annual financial statements can be used for the calculation of income tax the tax payable method of accounting can also be used to account for tax effect accounting method, but also for the tax effect accounting method, companies can either use the deferral method, the liability method can also be used be accounted for, so in the mid-income to determine the measurement method, first look at the company annual financial statements used in a method of accounting for income taxes which, if companies use the annual accounting statements accounting for income taxes payable method, in the medium term accounting statements should also be in accordance with the principles of tax law is expected to meet medium-term income tax, if the annual accounting statements of enterprises in the adoption of tax effect accounting method, income tax, in the interim accounting statements should also be in accordance with tax effect accounting method of accounting principles is expected mid-income , in which the annual financial statements if the enterprise is used in accounting for deferred income tax law, in the interim accounting statements should also be in accordance with the deferral method of accounting principles is expected mid-term income tax, if the enterprises in the annual accounting statements the liability method is used income tax, in the interim accounting statements should also be using the liability method of accounting for income tax accounting principles in the tax effect accounting method, timing differences for the treatment principles are consistent with the annual financial statements. corporate income tax in the measurement of the medium, but also should be in the beginning to the end of the basis for permanent differences and timing differences is to early to judge this based on data in the end, regardless of the situation is expected to occur throughout the year.

Set forth below are based on the provisions of China's accounting standards, examples of medium-term income tax accounting.

First, the tax payable under the law, income tax accounting treatment of the mid-
The tax payable method is a direct income tax payable calculated in accordance with current tax expense to confirm a tax accounting method, the method, does not recognize the impact of timing differences on the amount of income tax, income tax expense equal to the current income tax payable. recognition and measurement of each in the mid-income tax, to the beginning to the end of the foundation.

Example 1: A is a need for the preparation of quarterly financial reports of listed companies, corporate income tax taxable year, sub-quarter advance company each quarter, the cumulative taxable income as shown in Table 1, the company income tax rate applicable is 25% State of the enterprise income tax-free incentives.

The company accounts for as follows:
1st quarter:
Taxable income for the quarter amounted to 50 million yuan
Income tax payable for the quarter = 5000 × 25% = 1250 (ten thousand yuan
Should be recognized in the quarter to 12.5 million yuan income tax expense
Accounting entries are:
By: Income Tax 12500000
Credit: Tax payable - Income tax payable
12500000
Q2:
Taxable income for the quarter = 8000-5000 = 3000 (million
Income tax payable for the quarter = 3000 × 25% = 750 (ten thousand yuan
Should be recognized in the quarter $ 7.5 million income tax expense
Accounting entries are:
By: Income Tax 7.5 million
Credit: Tax payable - 7,500,000 Income tax payable
Q3:
Taxable income for the quarter = 13000-8000 = 5000 (million
Income tax payable for the quarter = 5000 × 25% = 1250 (ten thousand yuan
This quarter income tax expense should be recognized for the 12.5 million yuan Links to free download http://www.hi138.com accounting entries are:
By: Income Tax 12500000
Credit: Tax payable - Income tax payable
12500000
Q4:
Taxable income for the quarter = 16000-13000 = 3000 (million
Income tax payable for the quarter = 3000 × 25% = 750 (ten thousand yuan
Should be recognized in the quarter $ 7.5 million income tax expense
Accounting entries are:
By: Income Tax 7.5 million
Credit: Tax payable - 7,500,000 Income tax payable
Second, the tax effect accounting method, income tax accounting treatment of the mid-
Tax effect accounting method is in accordance with current income tax payable and income tax effects of timing differences on the total number to confirm the amount of income tax expense method in the method, companies should recognize the impact of timing differences in the amount of income tax, and the time differences in the amount of deferred income tax effects, and assigned to the subsequent period. enterprises in the mid-recognition and measurement of income for each fee, should be the beginning to the end of this basis.

Example 2: A is a need to prepare our quarterly financial reports of listed companies, corporate income tax rate applicable is 25%, a quarter of the year the accounts receivable balance, the actual balance and the provision for bad debts, such as pre-tax accounting profit Table 2. assuming that the beginning of the year the company's bad debt reserve balance is zero. tax law for business bad debt losses in accordance with the actual amount from the taxable income is deducted, the extraction ratio of bad debt reserve shall not exceed the year-end accounts receivable balance of 5 ‰.

Each quarter of the company's annual taxable income to allow the deduction for bad debts in the amount, timing differences arising from various quarters of the taxable income and tax expense as shown in Table 3.

A company's accounting treatment is as follows:
1st quarter:
By: Income Tax 3,750,000
Deferred tax 712 500
Credit: Tax payable - Income tax payable
4460500
Q2:
By: Income Tax 4,250,000
Deferred tax 427 500
Credit: Tax payable - Income tax payable
4677500
Q3:
By: income tax 5000000
Deferred tax 760 000
Credit: Tax payable - Income tax payable
5760000
Q4:
By: Income Tax 6,250,000
Deferred tax 950 000
Credit: Tax payable - Income tax payable
7200000
References:
1, Lin Zhong higher. New Advanced Accounting [M]. Shanghai Lixin Accounting Publishing House, 2009.

2, Improving Business Reporting [Z] .2007.

3, as Howlin. Income tax international comparison [D]. Tianjin University of Finance Proceedings, 2010. Links to free download http://www.hi138.com