October 30, 2016 admin

Other Liabilities

Liabilities and Net Worth

OTHER LIABILITIES LIABILITY ACCOUNT
2700

ACCOUNT EXPLANATION
Long term liabilities not provided for elsewhere in this Manual, including income tax on expenses deducted for income tax purposes but not deducted for book purposes until a subsequent year.
TRANSACTIONS
  Jrnl. Dr. Cr.
  Income tax on expense items deducted for tax purposes but not for book purposes G
    Income Taxes—Current Year 2205
      Other Liabilities 2700
             
  Transfer of portion of income tax liability in Account 2700 that is due in the current year G
    Other Liabilities 2700
      Income Taxes—Current Year 2205
COMMENTS
  • One of the purposes of this account is to provide a means of applying deferred income tax accounting principles when expenses are deducted for income tax purposes but are not expensed for book purposes until a subsequent year. Tax counsel should be consulted regarding the use of deferred income tax accounting. This includes Extended Service Plans sponsored by the dealership or outside independent sources.
  • The above transactions assume that the current-year income tax expense as recorded in Account 9900, Estimated Income Taxes, was calculated using book income, unadjusted for tax differences.