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CARE adjustments |
See Also
Adjustment of profit | Expense analysis | Profit and loss account / Income statement (D schedule) | Short term timing / temporary differences
Select from the following headings:
Background | Developing the schedule | Completing the Schedule | Standard Sub-Schedules | Carry Forward | Related Errors
CARE stands for Calculation of Accountancy Rental Excesses and only applies to finance leases held by a lessor.
This schedule calculates any necessary adjustments to be made in the tax computation of a finance lessor, where taxable rental income is less than the income or gross earnings recognised in the accounts; for example, if rental payments are received in arrears. The difference is treated as a disallowance per the A schedule and a cumulative balance is maintained on the deferred tax Short term timing differences schedule. Where taxable rental income starts to exceed accounting income, the difference is then treated as non taxable on the 'A' schedule, and this is continued on a period by period basis until the total short term timing difference balance is reduced to zero.
The schedule should be developed from the Leasing sub menu from within an Expense analysis schedule. It will then be stored within the 'A' pack of schedules.
The entry cells are described in more detail below:
Accountancy rental (excess)/deficit b/f
The software will either complete this cell automatically from the carry forward cell where a new period is built, or alternatively, the amount can be entered manually.
The amount will feed through to the brought forward CARE adjustments cell on the Short term timing differences schedule.
Taxable accountancy rental (earnings)
Enter the rental or gross earnings recognised in the books of the finance lessor for the period.
Credit to profit and loss account
Enter the rental income amount that is currently being recognised in the accounts.
Accountancy rental (excess)/deficit c/f
The software will compute this automatically with reference to the other schedule entries. The amount will feed through to the carried forward CARE adjustments cell on the Short term timing differences schedule.
CARE (increase)/reduction in taxable amount
The system will derive the net movement and make the necessary adjustment on the A schedule.
There are no standard sub-schedules.
On carry forward, this schedule is automatically developed in the subsequent computation if it is present in the prior year computation. In the subsequent computation, the accountancy rental (excess)/deficit brought forward is entered automatically.
© 2009 Thomson Reuters.