IAS-12 Deferred Tax

Question 1

Definition

Reason it arises

Answer 1

• Estimate tax payable in future periods due to temporary differences.
• Temporary differences are differences between CV in SOFP and its tax base.

Question 2

Determining DT A/L

Answer 2

Temporary difference=CV-Tax base

• If CV>Tax base (positive difference): DT liab
• If CV<Tax base (negative balance): DT asset.

Question 3

Treatment on DT A/L

Answer 3

• Provide for all DT liabilities
• Recognise the DT asset (assuming it’s probable)
• No discounting