Current tax payable is defined as which of the following?

• A. The tax expense for the period including current and deferred
• B. The balance of deferred tax assets
• C. The tax payable that will be due after benefits of credits
• D. The amount due for the period's current taxes

Answer: (D)

The main idea is to separate what you owe for the current period from the tax expense you recognize and from future tax effects. Current tax payable is the amount of income taxes the company must pay to tax authorities for the current period. It’s a current liability on the balance sheet and is based on the period’s taxable income and the applicable tax rate, adjusted for any prepayments or credits that reduce what’s ultimately due.

This item is not the total tax expense recognized in the income statement, which includes both the current tax expense and any deferred tax expense arising from timing differences. It’s also not the balance of deferred tax assets, which are future tax benefits. While credits can affect what is ultimately paid, the standard concept of current tax payable focuses on the amount due for the period’s current taxes, making it the best fit.