CERTYNEX IFRS ACADEMY

Fervalde declares a gross dividend of 800,000 and withholds 10% (80,000) on behalf of its shareholders, as required by the legislation in the case. The accountant recognised the 80,000 as current tax expense and charged only 720,000 to equity. Where is the error?

The withholding is part of the dividend: 800,000 in equity, no tax expense.

The withholding should have been recognised in other comprehensive income.

The withholding should only have been recognised when paid over to the authorities.

The withholding should have been 72,000, computed on the net dividend.