Mat query

Dear Sheebu,

What u have written is correct. INstead of passing two entries, u have passed a single combined entry. Effects are saem. Since income tax provision will be Rs.70000/-,charge to P&L a/c will be Rs.50000 net (70000-20000) and mat entitlement Rs.20000 reflected under current assets. Hence both the ways of accounting mat credit entitlement are correct. 

Dear Ms.Sheebu,

Your method will understate the debit towards taxation in p&l account which will not be accetable to the auditors as well as the shareholders. The actual tax debit to the profit should be the tax as per MAT provisions.