plain IAS 12 “Income tax” was issued in 1996 and revised in 2000. It details the requirements relating to the accounting treatment of deferred tax. Explain current IAS 12 “Income tax” requirements relating to the accounting treatment of deferred tax.

plain IAS 12 “Income tax” was issued in 1996 and revised in 2000. It details the requirements relating to the accounting treatment of deferred tax. Explain current IAS 12 “Income tax” requirements relating to the accounting treatment of deferred tax.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

Question

2 Explain IAS 12 “Income tax” was issued in 1996 and revised in 2000. It details the
requirements relating to the accounting treatment of deferred tax. Explain current IAS 12
“Income tax” requirements relating to the accounting treatment of deferred tax.

Definition Definition Estimated future tax made while preparing accounts. Deferred tax is estimated based on past and present transactions from financial statements. It is not the actual tax that needs to be paid or is refundable from the revenue authority; it is an accounting entry. It is necessary to account for deferred tax due to difference between accounting profits and taxable profits.

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