1. If the enterprise loses money, it can make up for it with the pre-tax profit of the next year. If the profit in the second year is insufficient, it can continue to make up for it in five years. This paper will focus on the accounting treatment of income tax in this way.
2, loss-making enterprises, the first five years of pre-tax profits are insufficient or make up for losses, with after-tax profits to make up. Deferred income tax is not recognized in this way. In the tax law, the loss balance cannot be deducted when calculating the taxable income.
3. The losses incurred by the enterprise can be made up by surplus reserve. Debit "surplus reserve" and credit "profit distribution-surplus reserve to make up for losses".
Extended data:
New and old tax laws make up for losses and deal with new tax laws.
Article 5 of the Enterprise Income Tax Law stipulates that taxable income is the total income of an enterprise in each tax year, after deducting non-taxable income, tax-free income, various deductions and losses allowed to be made up in previous years.
Article 18 stipulates that the losses incurred by an enterprise in a tax year may be carried forward to the following year to be made up with the income of the following year, but the longest carrying-forward period shall not exceed five years.
Tax exemption for investment income in the new law: Article 26, paragraph 2, item 3 of the Enterprise Income Tax Law stipulates that income from equity investment such as dividends and bonuses among qualified resident enterprises shall be tax-free. Non-resident enterprises set up institutions within the territory of China to obtain dividends, bonuses and other equity investment income actually related to the institutions.
The provisions of article 83 refer to the investment income obtained by resident enterprises directly investing in other resident enterprises. It does not include the investment income obtained by continuously holding the public offering and listing shares of resident enterprises for less than 12 months.
Old tax law: "Article 11": If a taxpayer has annual losses, it can make up for them with the income of the next tax year; If the income in the next tax year is insufficient to make up for it, it can be made up year by year, but the longest time limit for making up for it shall not exceed five years.
Baidu Encyclopedia-Make up for the loss of last year