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.

Question: 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)