The following is a statement of earned surplus prepared company for 2021: Balance, 1/1 Additions: Change in estimate of 2021 amortization expense Gain on sale of land Interest income Profit for 2021 P 85, P 2,800 18,350 4,500 bar13,680p 39

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Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.