Presentation is loading. Please wait.

Presentation is loading. Please wait.

FAC3701 Income taxes IAS 12.

Similar presentations

Presentation on theme: "FAC3701 Income taxes IAS 12."— Presentation transcript:

1 FAC3701 Income taxes IAS 12

2 OVER VIEW The objective of this statement is to prescribe the accounting treatment for the current & future tax consequences of: the future recovery/(settlement) of the carrying amount of assets/(liabilities) that are recognised in an enterprise's statement of financial position, and transactions and other events of the current period that are recognised in an entity's financial statements.

3 DEFERRED TAX Tax Base OF a liability an asset
asset or liability is the amount attributable to that asset or liability for tax purposes. Amount will be deductible in future against any taxable economic benefits flowing into the entity when it recovers/settles the carrying amount of the asset. carrying amount of the liability, less any amount, that will be deductible for tax purposes in respect of that liability in future.

4 Deferred TAX rules Rules Deferred Tax Deferred Tax Asset Liability
1. CAA > TBA 3.CAA < TBA 2. CAL < TBL CAL > TBL Dr Def Tax expense (SCI) Dr Def Tax Asset- SARS (SFP) Cr Def Tax Liability – Cr Def Tax (SCI) Provision Made for Def Tax expense Provision Made for Def Tax. Deferred Tax Liability Deferred Tax Asset Rules

5 IAS 12 Income Taxes Differences LIABILITY Payable in Future Due to
Taxable Temporary Differences (Temporary future Profits - from small amounts deductible in future) ASSET Recoverable in Future Due to Deductible Temporary Differences Tax Credits Carried Forward Tax Losses Carried Forward 

6 IAS 12 Income Taxes Objective Except Same Treatment of
Underlying Transactions & Other Events And Tax Consequences of Transactions & Other Events for Transactions recognised In equity – thus Tax effects Recognised in equity

7 Financial Position Approach
IAS 12 Income Taxes Financial Position Approach

8 Financial Position Approach
The balance sheet approach to deferred tax: [CA – TB = temporary difference] x tax rate = D Tax To Calculate Deferred Tax Draw up S F P Then Calculate Deferred Tax On Closing amounts Carry Amounts Assets and Liabilities Tax Bases Assets and Liabilities

9 Exempt Differences Goodwill Initial Recognition Asset / Liability
With Un- Taxable Amortization Initial Recognition Asset / Liability 2.2 Neither affects – Accounting or Taxable profit 2.3 Transaction Not a business combination

10 IAS 12 Income Taxes RECOGNITION
Liability – Recognised for ALL – taxable - Temporary Differences Asset – Recognised – Extent - Probable Taxable Profit – Available- Against which– Deductible- Temporary Differences - Can be utilised

11 ASSETs v/s Liabilities
Resource Controlled Past event Reliable measurement Cost Economic Benefits Expected to flow INTO A S E T

12 ASSETs v/s Liabilities

13 IAS 12 Income Taxes Measurement of
Current Tax / Def tax liability / Def Tax Asset @ Enacted Tax Rates Change in Rate Para 47 – results in Adjustment of Opening balances of both Deferred Tax Assets or Liabilites

14 IAS 12 Income Taxes Pa page 54 Add one more year to the Example

15 IAS 12 Income Taxes

Download ppt "FAC3701 Income taxes IAS 12."

Similar presentations

Ads by Google