Home › CA Final › financialreporting › Ind AS 34 — Interim Financial Reporting: Contents, Recognition & Measurement, Estimated ETR, Seasonal Revenues › EMPLOYER PAYROLL TAXES assessed on an annual bas…
EMPLOYER PAYROLL TAXES assessed on an annual basis with a per-employee earnings cap should be recognised across interim periods using:
AStraight-line allocation based on calendar months
BAn ESTIMATED AVERAGE ANNUAL EFFECTIVE PAYROLL TAX RATE, even though actual cash outflows are concentrated early in the year
CRecognition in the final interim period only
DActual cash payments in each interim period (which front-load early in the year)
Answer & Solution
Correct answer: B. An ESTIMATED AVERAGE ANNUAL EFFECTIVE PAYROLL TAX RATE, even though actual cash outflows are concentrated early in the year
When taxes are annual but cash payments are concentrated early (due to per-employee caps), interim expense uses estimated average annual effective rate. This avoids misleading inferences from cash timing — same principle as income tax.
Related questions
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