A company has a provision for long service leave for 35,000. In the same year, the company paid out $5000 in Long service leave to one of its long serving employees.
Describe what the accounting treatment is to the $5000 payment and what the tax treatment is to the $5000 payment in the current year.
(Hint: According to GAAP, this kind of accured expense is recognised as an expense when accrued and according to Tax regulation in New Zealand, it will be recognised as a tax deduction when they are acutally paid).