Question

What amount should be reported as current tax expense for the current year?
What amount should be reported as income tax payable for the current year?
What amount should be reported as total income tax expense for the current year?

Answer 1

Current tax expenses is a nominal account. It is calculated as percentage of tax on income before tax.
It is calculated as tax expenses for the current year without adjusting any payment of it's and deferred tax
adjustment. Current tax is the part of income tax expenses. It is charged to income statement.
Income tax payable is a liability of current year tax, which is outstanding to pay. It is calculated as current
tax expenses less tax paid if any. It is classified as current liabilities.
Income tax expenses is the total of current tax expenses and deferred tax expenses. It is charged to
income statement and deduct from income before tax to reach at net income after tax.
For better understanding an example taken as given below:
A company having income before tax $ 5,00,000 and tax rate is 30%. Advance tax paid during the year is
$ 1,00,000. Deferred Tax (Liability) for the year is $ 5,000.
So, Current Tax Expense is (500000 x 30%)   $	1,50,000
Income Tax Payable is (150000 - 100000)      $	50,000
Total income Tax Exepnses (150000 + 5000) $	1,55,000