Thursday, April 22, 2010

#89- Accounting treatment for tax penalty

One of our Accounting & Audiitng blog reader inquired us the following:

" How should penalty on late repayment for tax been accounted for?"

Should it be a tax expense? Should it be other expenses?

To clarify: penalty imposed by inland revenue authority on late repayment for tax should not be accounted for as tax expense; it should be accounted for as administrative expense/ other expense.


modern audit said...

Yes, i have put it

Anonymous said...

Hi, is there any specific accounting standard for reference to justify the classification of tax penalty under expenses instead of tax expenses?