367.2360—Account 236, Taxes accrued.
(a)
This account must be credited with the amount of taxes accrued during the accounting period, corresponding debits being made to the appropriate accounts for tax charges. The credits may be based upon estimates, but from time to time during the year as the facts become known, the amount of the periodic credits must be adjusted so as to include as nearly as can be determined in each year the related applicable taxes. Any amount representing a prepayment of taxes applicable to the period subsequent to the date of the balance sheet, must be shown under account 165, Prepayments ( § 367.1650 ).
(b)
If accruals for taxes are found to be insufficient or excessive, corrections must be made through current tax accruals.
(c)
Accruals for taxes must be based upon the net amounts payable after credit for any discounts, and must not include any amounts for interest on tax deficiencies or refunds. Interest received on refunds must be credited to account 419, Interest and dividend income ( § 367.4190 ), and interest paid on deficiencies must be charged to account 431, Other interest expense ( § 367.4310 ).
(d)
The records supporting the entries to this account must be kept so as to show for each class of taxes, the amount accrued, the basis for the accrual, the accounts to which charged, and the amount of tax paid.