IAS 12 - Income Taxes

Question 1

underprovision

Answer 1

• An underestimate of the tax expense in the previous year.

- This must be added to the current year tax charge

Question 2

overprovision

Answer 2

• An overestimate of the tax expense in the previous year

- This must be deducted from the current year tax charge

Question 3

accounting for income taxes

Answer 3

• Recognized as an expense in the SOPL and other comprehensive income and as a current liability in the SOFP
• Tax in the SOFP is always the estimate of the current year’s tax bill
• Tax in the SOPL and other comprehensive income = (current year estimate) - (prior year over-estimate) + (prior year underestimate)