IAS 12 Flashcards
Formula income tax if A
AB>TB =TTD
x tax % = DTL
AB<TB =DTD
x tax % = DTA
Acct treatment when eā made loss years ago in indv FS, in GP FS recog DTA in respect of c/f of unused tax losses
DTA arises due to:
-DTD
-c/f of unused tax losses
-c/f of unused tax credit
Recognition:
-up to the extent probable that suff taxable profit which WILL be available agst which DTD or c/f amt(as above) {losses} can be utilised
Exception:
Not recog for batgain purchase - not taxable
Definition of Current Tax
Amount of income tax payable in respect of taxable profit for the period
Definition of Deferred Tax
DT arises when income tax liability in tax profit calculation is different from acct profits.
Tax authorities use different rules from accounting rules in calculating taxable profit opposed to acct profit.
Recognition of DTL
Income Tax payable in future in respect of TTD.
Exemption: (IRE)
-initial recog of GW; or
-initial recog of A/L which:
i)is NOT a biz combi
ii) DOT, affect neither AP or TP (permanent difference)
*not apply to A/L in a single transaction
*dont apply if both DTD & TTD arise
Measurement criteria for CTL
Tax rates and laws have been enacted or substantively enacted by the end of RP
Measurement criteria for DTL
Tax rates and laws have been enacted or substantively enacted by end of RP.
If tax rates changes, ALL DTA/ DTL must be revalue using new tax rate at time of reversal.
Increase tax burden, dec profit.
DTA/ DTL measured using average rates in which TD are expected to reverse.
*Shd not be disc, affect comparability and reliability ( detailed scheduling of timing of reversal needed )
IAS 12 - consider tax losses result from identifiable causes which are ublikely to recur
Cast sigfnificant doubt about the likelihood of future profits.
Forecast performance is acceptable BUT shd NOT be a reliable evidence
Shd place reliance on existing performance to access likelihoof of future profits (existing products, debt covenant - GC)
