- 3 Marks
FR – Nov 2019 – L2 – Q2a – Financial Reporting Standards and Their Applications
Treatment of under-provision of tax for Daaho Ltd for the year ending 31 August 2019. Question:
Question
Daaho Ltd (Daaho) manufactures and distributes security equipment. Daaho prepares financial statements in accordance with International Financial Reporting Standards (IFRS) up to 31 August each year.
On 31 August 2019, the taxation liability account in the books of Daaho Ltd showed a debit balance of GH¢17,500 after paying the 2018 liability. The estimated liability for 2019 is GH¢84,500 and no entry has yet been made to record this.
Required:
Explain the appropriate accounting treatment of the above transaction for the year ending 31 August 2019.
(3 marks)
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