PAS 12 Flashcards
(15 cards)
What is PAS 12
Income Taxes
If the increase in deferred tax liability exceeds the increase in deferred tax asset, the difference is __________________. If it is the opposite, the difference is ___________________.
deferred tax expense
deferred tax income or benefit
A deferred tax asset is recognized only to the extent that it is _____________.
realizable
Computed using PFRSs
Total income less total expenses, excluding tax expense
Other terms: pretax income, financial income and accounting income.
Accounting profit or loss
Computed using tax laws
Taxable income less tax-deductible expenses
Other term: taxable income
Taxable profit (Tax Loss
The varying treatments of economic activities between the PFRSs and tax laws result to ___________________________.
permanent and temporary differences
those that do not have future tax consequences.
Permanent differences
Examples of Permanent differences:
a. Interest income on government bonds and treasury bills
b. Interest income on bank deposits
c. Dividend income
d. Fines, surcharges, and penalties arising from violation of law
e. Life insurance premium on employees where the entity is the irrevocable beneficiary
those that have future tax consequences.
Temporary differences
Temporary differences are either:
a. Taxable temporary differences
b. Deductible temporary differences arise in case of the opposites of the foregoing.
arise, for example, when financial income is greater than taxable income or the carrying amount of an asset is greater than its tax base.
Taxable temporary differences
Taxable temporary differences result to ______________________ while deductible temporary differences result to __________________.
deferred tax liabilities
deferred tax assets
Deferred taxes are measured using _________________that are applicable to the periods of their expected reversals.
enacted or substantially enacted tax rates
True or false
Deferred tax assets and liabilities are discounted.
false because it is not discounted
True or false
Deferred tax asset and liabilities are presented as current.
False- because it is presented as non-current
