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IAS 12 - Workings Notes

IAS 12

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20 views

IAS 12 - Workings Notes

IAS 12

Uploaded by

fahad.aly.ca
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 PDF, TXT or read online on Scribd
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IAS 12 – Chapter text

Calculation of deferred tax for a comprehensive exam question:


Carrying Tax Base Difference/ Applicable DTL/(DTA)
amount Loss tax %
Assets
xxxxx X X X X% X
xxxxx X X X X% X
xxxxx X X X X% X

Liabilities
xxxxx X X X X% X
xxxxx X X X X% X
xxxxx X X X X% X

c/f tax loss (X) X% (X)


c/f tax credit (X)
Closing DTL/(DTA) X

Tips:
- for assets, difference = CA – TB
- for liabilities, difference = TB – CA
- Do not include assets/liabilities which are covered under exception, in above calculation.

Calculation of deferred tax expense for the year in a comprehensive exam question:

Deferred tax [DTL / DTA]


b/d [Opening DTA] X b/d [Opening DTL] X
Tax on OCI (e.g. revaluation downwards) X Tax on OCI (e.g. revaluation upwards) X
Effect of tax rate change on OCI item X Effect of tax rate change on OCI item X
Tax expense (– ve expense) (bal.) X Tax expense (+ ve expense) (bal.) X
c/d [Closing DTL] X c/d [Closing DTA] X

DISCLOSURES

5 – Deferred tax Opening -------- Recognized during the year ------- Closing
Balance Equity OCI P&L Balance
Deferred tax comprises of: ------------------------------------ Rs. million -------------------------------------
Deferred tax liability
PPE X X X X
Investments X X X X
Deferred tax asset
Liability for gratuity (X) X (X)
Lease liability (X) X (X)
Doubtful debts (X) X (X)
c/f loss (X) X (X)
X X X X

Nasir Abbas FCA 11.1.1


IAS 12 – Chapter text

15 – Taxation / Tax expense Rs. million


Current tax:
- For current year XXX
- For prior year* [under/(over) estimate] XXX
XXX
Deferred tax:
- Effect of tax rate change (W-1) XXX
- For prior year* XXX
- Relating to differences for the year XXX
XXX
XXX
Relationship between accounting profit and tax expense:
Accounting profit [PBT] XXX
Tax [PBT x Applicable tax rate] XXX
Tax for prior year [as above] XXX
Effect of tax rate change [as above] XXX
Exempt income** [Income x Applicable tax rate] (XXX)
Tax credit for current year (XXX)
Permanently inadmissible expense** [Expense x Applicable tax rate] XXX
Benefit arising from a previously unrecognized DTA (XXX)
Effect of lower/higher tax rate for expenses / incomes (e.g. dividend) +/- XXX
[Expense or income x difference in tax rate]
XXX
* If tax adjustment is received after assessment in respect of prior year then:
- it is included in deferred tax if there was b/f tax loss. Such adjustment is made in b/f tax loss in current tax
working
- otherwise it is included in current tax
** These are the items which do not have any tax treatment at all (i.e. neither current nor deferred tax).

W-1 Effect of tax rate change

1) If tax rate for current tax and deferred tax for the current year is same but it is different from last year, then
effect of change in tax rates is calculated on opening temporary differences.
2) If tax rate for current tax for current year and deferred tax for last year is same but it is different from deferred
tax for current year, then effect of change in tax rate is calculated on closing temporary differences.
3) If tax rates for all three (i.e. current tax for current year, deferred tax for current year and deferred tax of last
year) are different then effect of change in tax rates is calculated for opening temporary differences as well as
closing temporary differences.

It is shown in above note as +/- as follows:

Rate increase Rate decrease


Taxable difference + -
Deductible difference - +

Note:

If different tax rates were applied on different items last year and multiple tax rates have changed this year, then
total amount of change is calculated by applying respective rate changes on corresponding items.

Nasir Abbas FCA 11.1.2

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