IAS 12 Flashcards
What is current tax?
Amonut of income taxes payable (recoverable) in respect of taxable profit (tax loss) for a period
How should current tax be recognised?
Year-end estimate of tax payable
How is the income tax expense through SPL adjusted?
For any under/over provision from prior year
What is tax payable in SFP?
A current liability
What is deferred tax in SFP?
A non-current liability
What does the income tax expense represent?
Made up of current tax expense and deferred tax expense
Tax payable in SFP?
Year end estimate, copied from additional information. Easy marks
Provision for current tax? Action
Put immediately in SFP
Calculate income tax for SPL?
Provision for current tax - under/over provision of tax liability
Credit in current tax?
An over-provision
Debit in current tax?
An under-provision
What is deferred tax?
Estimate future tax consequences of transactions and events in FSs of current and previous periods
What is deferred tax not?
A tax payable to the government
What does deferred tax resolve?
Accounting profits not being equal to taxable profits
What is a permanent difference?
One off difference between accounting and taxable profits caused by certain items not being taxable/allowable
Do permanent differences have deferred tax?
No
What is a temporary difference?
Difference between accounting and tax treatment this year
Examples of a temporary difference?
Difference between depreciation and capital allowances
Overseas dividend income
1st step in calculating deferred tax?
Calculate temporary difference (If not given)
How to calculate tax base?
Cost - accumulated tax depreciation
2nd step in calculating deferred tax?
Deferred tax position
Calculation for deferred tax position?
Temporary difference * tax rate (SFP)
3rd step in calculating deferred tax?
Whether it’s deferred asset or a deferred liability
What is a deferred asset?
Carrying value < Tax base
What is a tax deferred liability?
Carrying value > Tax base
What can a deferred liability also be called?
A taxable temporary difference
4th step in calculating deferred tax?
Calculate movement in deferred tax position
Where does movement go?
In SPL
If there is an increase in movement of deferred tax?
Debit: Income tax expense (SPL)
Credit: Deferred tax provision
If there is a decrease in movement of deferred tax?
Debit: Deferred tax
Credit: Income tax expense (SPL)
Revaluation gain?
FV - CV
Total tax charge?
Deferred tax (20X1) + taxation (20X1) + tax charge in ending year (20X2) - Deferred tax (20X2) + taxation (20X2)
Debit balance on current tax?
Is an under-provision, a positive value
Credit balance on deferred tax provision?
Deducted
What is a tax provision?
An estimate of the future tax liability that a company expects to incur.
Tax base calculation?
Cost of asset - tax allowances at %
Credit balance on current tax?
Is an over-provision, a negative value
Overprovision in current tax?
Deducted
underprovision in current tax?
Added
Deferred tax provision which includes revaluation
Decreased
Revaluation surplus?
Added to provision
Tax charge for current year and debit/credit balance for current tax?
Included in the same working
Provision for income tax for the year? Another term for
Another term for current tax
Movement of deferred tax?
Deferred tax credit balance - deferred tax provision
Total depreciation for the year?
Claimed depreciation for the year - charged depreciation in FSs
Are proceeds incldued in reducing balance method?
No
Another term for deferred tax position
Closing deferred tax provision
Carrying value > tax base
Deferred tax liability. Taxable temporary difference
Tax closing position (closing deferred tax provision)
SFP
Tax movement
SPL
Movement increase in deferred tax? (Deferred tax liability)
Debit: Tax expense (SPL)
Credit: Deferred tax provision
Movement decrease in deferred tax? (Deferred tax asset)
Debit: Deferred tax
Credit: Tax expense (SPL)
What can tax base also be known as?
Tax written down value
Credit to deferred tax account/
Interest receivable
Prepaid expenses
