Recognition of Deferred Tax. Case Studies in Accounting “Bridging the Gap"

Abstract

PQR (Lanka) Limited is a company whose preliminary engagement is to manufacture and sell Paints. It leverages its worldwide experience to deliver products of International quality & assortment to the consumers with complete range of decorative, wood finishes and industrial coatings. When considering about the supply chain of the company, distributors play a vital role which ultimately decide the reachability of products all around the country without any exertion. The rapid change of customer behaviors and innovative technologies led the company to think differently and be wise in the situation where opportunities can explore and execute. Therefore with considering those facts company has been decided to go one step ahead from the manufacturing process on conventional paints. So they introduced “Luxury Paints” as a new product range for the company. Hence dealers need to be attracted to sell new product. Company introduces “Gold Coin Awards” for distributors who achieved more sales on “luxury paints” as a “promotional campaign”. This will be conducted in subsequent financial year based on the performance of current financial year for selected distributors. Since “this is a present obligation and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation”, company has been provided a monthly provision for this gold coin awards.