Which statement accurately describes the correct tax treatment. a. The percentage of bad and doubtful debts at year-end is an estimate and allowable as it is specific bad debts provision. No adjustment is made to the income tax computation. b. If refunds from income tax of $150,000 included in revenue – the amount is subtracted in the income tax computation because the amount should have been credited to a tax recoverable account rather than to the profit and loss. Some countries specifically state that this is not a taxable income. c. Legal expenses for debt recovery are not allowed. We add this back in the income tax computation. d. Donation to the football club is an allowable expense for income tax purposes as the football club is a registered club. Therefore, we could not add this back in the income tax computation.
Which statement accurately describes the correct tax treatment.
a. The percentage of bad and doubtful debts at year-end is an estimate and allowable as it is specific
b. If refunds from income tax of $150,000 included in revenue – the amount is subtracted in the income tax computation because the amount should have been credited to a tax recoverable account rather than to the
c. Legal expenses for debt recovery are not allowed. We add this back in the income tax computation.
d. Donation to the football club is an allowable expense for income tax purposes as the football club is a registered club. Therefore, we could not add this back in the income tax computation.
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