Hi there.I have done a search but could not find any reference related to 24c.Can any one tell me if the following interpretation of the act is correct.
*The determination of the allowance will depend on the estimated profit margin of the contract*
The total cost incurred will be posted to the income statement at every financial year end. A percentage will be calculated for the annual cost in comparrison to the total estimated cost or the contract. The same percentage will applied to the total estimated sales, and this amount will be carried to the income statement at year end.
Should there be a surplus remaining for sales (in the balance sheet) after the income statement was credited, this amount will be fully taxable (Deffered Tax). However as the remaining sales do not reflect clear profit, a allowance for future cost applies.
This allowance should not be greater than the sales less the estamed profit margin.
The derrered taxation paid on the remaining sales balance less the 24c allowance will reflect as a tax credit in the following financial year.