Cash Flow Statement..

This query is : Open

Rahul (Querist)
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11 July 2010 Suppose A Company HAs 200000 as provision for Tax on Liability side of and has 230000 as Advance Tax On Asset Side of earlier years Say from 1996-97 to 2002-03...,,,nd nw th company is a loss making co...nd no chances of revival

If th company write-off advance tax against provision thinking no refund will bw obtained and pass th following journal entry...

P & L A/c. Dr 30000
Provision 4 Tax A/c. 200000
To Adv. Tax 230000

What will b its implication on Th operating activities cash flow?

DR GAURAV GUPTA FCA, FCS, LL.B

DR GAURAV GUPTA FCA, FCS, LL.B (Expert)
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12 July 2010 company must reverse the provision of tax but it will not effect the refund of income tax because reversal of provision is not the income and as per proper accounting it will not effect the advance tax a/c and can not be adjusted against it, however it will effect accounting profit not taxable profit.

Rahul

Rahul (Querist)
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12 July 2010 u mean 2 say as ,

1. we should reverse th PRovi by crdiding p&l nd Dr. Provision

2.We should show Advance Tax as it is as an Asset...

Right?

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