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IAS 12 Requires An Entity To Account For The Tax Consequences of Transactions and Other Events in The

IAS 12 prescribes the accounting treatment for income taxes. It aims to account for the current and future tax consequences of transactions recognized in the financial statements and the future recovery or settlement of assets and liabilities. IAS 12 requires deferred tax assets and liabilities to be recognized for temporary differences between the carrying amounts of assets and liabilities and their tax bases. It also addresses the recognition of unused tax losses and credits as well as the presentation and disclosure of income taxes.

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49 views

IAS 12 Requires An Entity To Account For The Tax Consequences of Transactions and Other Events in The

IAS 12 prescribes the accounting treatment for income taxes. It aims to account for the current and future tax consequences of transactions recognized in the financial statements and the future recovery or settlement of assets and liabilities. IAS 12 requires deferred tax assets and liabilities to be recognized for temporary differences between the carrying amounts of assets and liabilities and their tax bases. It also addresses the recognition of unused tax losses and credits as well as the presentation and disclosure of income taxes.

Uploaded by

ArnoldQuiranteJustiniana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Objective of IAS 12

-to prescribe the accounting treatment for income taxes. The major issue is how to account for the
current and future tax consequences of
-future recovery of the carrying amount of assets/future settlement of liabilities
-transactions recognized in the F/S in the current period.
Deferred tax asset- recognize when the carrying amount of the asset is recovered at an amount or under
a timing different from that considered for tax purposes
TAXABLE TEMPORARY DIFFERENCE X TAX RATE
Deferred tax liability-recognize when the carrying amount of the liability is settled at an amount or
under a timing different from that considered for tax purposes
DEDUCTIBLE TEMPORARY DIFFERENCES X TAX RATE + UNUSED TAX LOSSES x TAX RATE AND TAX
CREDITS
IAS 12 requires an entity to account for the tax consequences of transactions and other events in the
same way that it accounts for the transactions and other events themselves, i.e:
in the statement of comprehensive income
in equity, or
in calculation of goodwill
IAS 12 also deals with
the recognition of deferred tax assets arising from unused tax losses or unused tax credits
the presentation of income taxes in the financial statements, and
the disclosure of information relating to income taxes
IAS 12- does no address accounting for government grants/ investment tax credit
Tax expense current tax + deferred tax
Current tax- taxable profit/loss * tax rate
Tax base- amount attributable to assets or liabilities for tax purposes
Temporary differences- differences between accounting base and tax base, due to differences in
treatment
a. taxable temporary differences-that which would result to taxable amount
b. deductible temporary differences-that which would result to deductible amount
ASSET LIABILITY
CA>TAXBASE TAXABLE TEMPORARY DEDUCTIBLE TEMPORARY
DIFFERENCE DIFFERENCE
CA<TAXBASE DEDUCTIBLE TEMPORARY
DIFFERENCE
TAXABLE TEMPORARY
DIFFERENCE

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