Zelmonde has been taxed at the higher rate for undistributed profits. Under the legislation in the case, a distribution entitles it to a refund equal to 10% of the dividend. It declares a dividend of 400,000, recognised as a liability; the distributed profits arise from its ordinary activity. Compute the tax income to be recognised.
- Dividend recognised as a liability
- 400,000
- Refund (% of the dividend)
- 10 %