IAS 12 (2) Flashcards
What is accounting profit/loss?
Profit or loss from period before deducting tax expense
What is current income tax?
Amount of income taxes payable (recoverable) in respect of taxable profit (loss) for a period
Current income tax calculation?
Taxable profit/(loss) * tax rate
Double entry for current income tax?
Debit: Expenses SPL or OCI
Credit: Tax liability
Difference between current and deferred tax (substance)
Current: Payable to tax office
Deferred: Accounting measure
Difference between current and deferred tax (basis)
Current: Taxable profit/(loss)
Deferred: Temporary differences
Difference between current and deferred tax (timing)
Current: Current period
Deferred: Future periods
Carrying value: 120
Tax base: 100
Next steps?
Temporary difference: 20
Tax rate 30%:
Deferred tax liability: 6
Deferred tax liability as carrying value > tax base
A taxable temporary difference is a result of?
An accounting gain, so a deferred tax liability
A revaluation gain of $10m on PPE, where no current tax is assessed, and tax rates are 20%?
Extra tax expense is $2m. Deferred tax liability of $2m
Gain is reported post tax at $8m (Goes in OCI SPL)
A revaluation gain of $10m on PPE, where no current tax is assessed, and tax rates are 20%? (SFP entries)
PPE 10
OCE 8 (net)
Deferred tax liability 2
What is a current tax provision?
The estimated amount a company expects to pay in taxes for the current fiscal year.
What is a deferred tax provision?
Future tax impact of temporary differences between book (financial statement) and tax accounting
Deferred tax position
Temporary difference * income tax rate
Example calculation for tax base
Cost of asset * tax/capital allowance
