Question

Refer to Samsung’s recent balance sheet in Appendix A. What current liabilities related to income taxes are on its balance sheet? Explain the meaning of each income tax account identified.

Short answer

Particular	31 Dec 2015 (KRW)	31 Dec 2014 (KRW)
Current liabilities
Income tax payable	3,401,625	2,161,109
Withholdings	992,733	1,161,635

Step-by-step solution

Definition of Current Liabilities

The liabilities that are due and will be paid within the operating period of the business or within one year are considered current liabilities of the business. These liabilities are reported in the balance sheet before non-current liabilities.

Current liabilities related to income taxes on the balance sheet

The business entity reports the following accounts related to income tax on the balance sheet:

1. Income tax payable: Income tax reports the amount of income tax charged on the business entity but still not paid to the government.
2. Withholdings: Withholdings reports the amount of income tax withheld from the employees' salaries to be paid to the government on behalf of employees.