Tax Part 9

Quick reference

• 00:04 Let's get that tax control account finished and
• 00:07 that balance sheet balancing, baby.
• 00:10 We're about to finish tax, yay.
• 00:14 Aren't you excited, only 28 years after we started seemingly.
• 00:18 This is a moment of celebration, did I wake you up anyways?
• 00:22 All right, let's go and have a look at the calculations, what have we got left to do.
• 00:27 All right, we've got the control account to actually create here.
• 00:30 So this is the big one.
• 00:31 This is the one with the six line items that we talked through in the theory
• 00:34 section before.
• 00:34 We've got the opening tax payable, plus the tax expense, deducted for tax paid.
• 00:39 Put through the movement, the movement in deferred tax assets and
• 00:43 deferred tax liabilities.
• 00:44 And then have the closing tax payable as the total.
• 00:48 First of all, let's bring in the closing tax payable.
• 00:50 We've already got that, we had it up here in our earlier control account there.
• 00:55 So we can just take it from there.
• 00:57 Let's put in our opening and closing numbers, so
• 01:00 that just equals the previous period's closing balance.
• 01:04 And this is simply going to be alt equals, as it always is,
• 01:07 the sum of those around it.
• 01:11 Pay specials formulas or PSF enter now the tax expense we've already calculated.
• 01:18 We got it from row 275 so let's go and
• 01:22 pick that up from up here there's row 275, click copy that across.
• 01:29 Now we need to work out our tax paid.
• 01:32 Tax paid, of course, is a negative number but we know that already.
• 01:36 We did that in row 331, do you see it's all coming together here?
• 01:42 And then we got to bring through our movements and deferred tax assets and
• 01:45 tax liabilities.
• 01:46 Now look let's just be clear here.
• 01:48 The movements are going to be what we use to get this control account to reconcile.
• 01:53 But the numbers we've put into the balance sheet will be the running totals.
• 01:56 Which is why I've got these empty cells here and here.
• 02:00 Because I'm not going to use those.
• 02:03 Okay so my movement in deferred tax asset is going to be back to here.
• 02:08 Take that one move it in DTA there copy that across and
• 02:12 my movement and deferred tax liability.
• 02:14 Now remember I've calculated that as a positive number.
• 02:16 So I'm going to have to reverse the sign again equals minus
• 02:20 back to my DTL it's row 311.
• 02:25 And copy that across.
• 02:29 Done, 29 228 379339.
• 02:36 29 228 379339.
• 02:40 Do you see?
• 02:41 This is a check.
• 02:42 We can actually put checks in here and
• 02:44 make sure that these numbers here equal the numbers down here, cuz they should.
• 02:49 I can't create two different closing tax payable numbers, can I?
• 02:52 This controller account is just a summary of everything that's gone before.
• 02:56 In real models, we tend to use templated calculations like these.
• 02:59 Honestly, this is almost an industry standard tax calc.
• 03:03 Depending on how the tax works in your territory or regime.
• 03:08 But it really is quite a complex one, and that's why it's taken us so
• 03:11 many videos to get here.
• 03:13 But hopefully, it's been worth it.
• 03:15 So all we've got to do now is put these calculations through.
• 03:18 So how many lines we got, we've got six.
• 03:20 That means we got five calculations to put through to get the balance sheet
• 03:23 to balance.
• 03:24 We need to put the tax expense as a negative number into the income statement.
• 03:28 That will then finish off the income statement.
• 03:30 We put this through as tax paid in the cash flow statement.
• 03:33 The movement in DTA and DTL, we don't use.
• 03:36 Instead we use this closing DTA balance here for
• 03:41 the deferred tax asset and not pay if we keep scrolling up.
• 03:43 You'll see the BS is why I put it there.
• 03:45 We use that number for our closing deferred tax liability.
• 03:51 Afterwards, we just put this in as our closing tax payable and
• 03:54 it's got a balance, hopefully.
• 03:57 So let's go and do it.
• 03:58 First of all then income statement, the key driver, so to the income statement.
• 04:03 Here it is, it's the last line we are finishing the PNL with this equals, minus.
• 04:08 To the calculations, here's my income statement.
• 04:10 Copy to cross, soon as I do that, my balance sheet, no longer balances.
• 04:16 Now to my cash flow statement, let's put through the tax paid.
• 04:19 It goes here, equals to my calculations.
• 04:25 That's my tax paid here, copy that across.
• 04:29 Now everything was balance sheet.
• 04:33 First of all into the non-current asset section, for deferred tax assets.
• 04:37 That equals to my calculations not this line here.
• 04:41 We're gonna take this line.
• 04:42 A running total of closing DTAs and copy that across.
• 04:47 Now we go down to non-current liabilities to deffered tax liabilities.
• 04:51 We go back to our calculations, we do not put this line up.
• 04:54 We go back up here and we find it here in row 315 and we copy that across.
• 05:01 Finally that's four of the five, the tax payable in row 31 is just equal to
• 05:06 the closing balance of our control account here.
• 05:11 Copy that across.
• 05:14 It balanced, hope against hope, we actually got the balance
• 05:19 sheet to balance doing this complex tax calculation.
• 05:24 But do you know what, it wasn't luck.
• 05:26 It was judgment.
• 05:27 You follow this process, it's got to work.
• 05:29 The controller count is your friend.
• 05:31 Hopefully you've realized this by now.
• 05:33 And so let's not double entry.
• 05:34 We've put five things through.
• 05:36 We've not done any even number anywhere and
• 05:39 it still works, but more importantly than any of that, we're finished tax.
• 05:44 Let's go do something else.

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