What Is an Income Tax Payable?

Income tax expenses refer to income tax payable on the operating profit of an enterprise. "Income tax expense", which calculates the income tax borne by an enterprise, is a profit or loss account; this is generally not equal to the current income tax payable, but the sum of the current income tax and deferred income tax, which is the income tax expense deducted from the current profit. Because there may be "temporary differences". If there is only a permanent difference, it is equal to the income tax payable in the current period. In response to the national taxation policy, monthly income tax collection is implemented by monthly settlement and settlement, that is, a policy of more refunds and less compensation. The specific performance is as follows: the enterprise sets up a settlement account and deposits a certain amount of money. When calculating the current income tax, the tax is settled through the settlement account. Even if there are differences in the later period, it will be in the next accounting period. Return or complete.

Income tax expense

The current income tax expense is the current income tax payable = taxable income * income tax rate (25%), of which taxable income =

On the basis of calculating and determining the current income tax (that is, the current income tax payable) and deferred income tax expenses (or income), the enterprise shall recognize the sum of the two as income tax expenses (or income) in the income statement, but does not include direct calculation. Income tax effects on transactions or events that are included in owner's equity. which is:

Income tax expenses (or income) = current income tax + deferred income tax expenses (-deferred income tax income)

How to deal with income tax expenses under the new standard?
For listed companies, we must manage income tax in accordance with the strict requirements of the Enterprise Accounting Standards. Since 2007, we will fully implement the new corporate accounting standards. In this accounting standard, the tax payable method, For debt requirements such as deferred method and clearing of profits, the balance sheet method should be adopted for financial calculation of deferred income tax.
For income tax expenses on the balance sheet, there are mainly the following. When calculating the current accounting profit to calculate the income on the balance sheet date, the taxable income is equal to the accounting profit plus the increase in tax adjustments minus the decrease in tax adjustments. In this formula, we can know that the adjusted increase in taxation means that corporate profits are reduced. According to the requirements of tax law, it is not possible to deduct corresponding expenses before tax, such as accrued asset impairment losses or losses from changes in fair value. Expenditures that exceed the salary standard, as well as expenses such as fines, cannot be deducted before taxes. However, the reduction of the tax adjustment means that the profit of the enterprise has increased. According to the relevant requirements of the tax law, it cannot be included in the income item, especially if the interest rate of the treasury bill or the long-term equity investment right is calculated, if the tax rate is equal Yes, then, in the recognition of income tax, it cannot be introduced into investment income. The items that have a certain impact on income tax mainly include accounting subjects such as transactional financial assets, long-term equity investments, available-for-sale financial assets, investment real estate, fixed assets, intangible assets, goodwill, dividends receivable, and accounts receivable.

Enterprises need to set up "income tax expense" in the profit and loss account. When using this account, pay attention to:

(1) The income tax expense confirmed by the accounting enterprise that is to be deducted from the total profit for the current period.

(2) Detailed accounting can be carried out according to "current income tax expenses" and "deferred income tax expenses".

(3) Main accounting treatment of income tax expenses.

On the balance sheet date, the enterprise shall pay the current income tax payable in accordance with the provisions of the tax law, debit the subjects (current income tax expenses), and credit the "tax payable-income tax payable" account.

On the balance sheet date, according to the balance of the deferred income tax assets' balance greater than the balance of the "deferred income tax assets" account, debit the "deferred income tax assets" account, credit the undergraduate (deferred income tax expenses), Public reserve-other capital public reserve "and other subjects; the balance of the deferred income tax assets should be less than the balance of the" deferred income tax assets "account for the opposite accounting entries.

The deferred income tax liabilities that an enterprise shall recognize shall be adjusted in accordance with the above principles for the subjects, "deferred income tax liabilities" subjects and related subjects.

(4) At the end of the period, the balance of the undergraduate subjects should be transferred to the "profit of the year" subject.