A client has sold a business property and I have worked out the corporation tax liability on the gain using the indexation allowance. When it comes to how this is reflected in the accounts, I have a corporation tax expense in the P&L based on business profits before the indexation allowance was applied and a corporation tax liability on the balance sheet of the amount after the indexation allowance was applied. Is this correct and if so, does the difference between the two get posted to the deferred tax account?
Related resources
Replies (3)
Please login or register to join the discussion.
I would be interested to know what your double entry was to achieve this result? And no it's not correct.
Your corporation charge should be on the profit after indexation allowance - that is of course what the company is going to pay isn’t it?
This is nothing to do with deferred tax. The property has been sold and the tax is actual, not deferred.
