A reconciliation with explicitly supplied treatment
A teaching exercise starts with accounting profit of ten million won. It then supplies the tax treatment of three items already included in that profit: a two-hundred-thousand-won expense is permanently nondeductible, a one-hundred-thousand-won receipt is nontaxable, and another three-hundred-thousand-won accounting expense is deductible only in a later year. The exercise does not identify these as any particular current statutory items and asks only for the adjusted income before any additional loss or deduction. A trainee subtracts every adjustment because all three amounts appear in an accounting list. The assessor wants a traceable reconciliation and a distinction between the permanent and potentially reversing components, with no invented Korean tax rate.
1. Calculate adjusted income under the supplied treatments.
Read the worked answer
Start with 10,000,000, add 200,000 and 300,000 for the disallowed expenses, and subtract 100,000 for the nontaxable receipt. Adjusted income is 10,400,000 won.
2. Which component can reverse under the assumptions?
Read the worked answer
The 300,000 expense deferred for tax can reverse when it becomes deductible. The stated permanent disallowance and nontaxable receipt are treated differently in the exercise.