IAS 12 provides guidance on accounting for deferred taxes. A deferred tax liability arises when tax depreciation is higher than book depreciation, resulting in lower current tax expense. A deferred tax asset occurs when tax depreciation is lower than book depreciation, resulting in higher current tax expense. These differences are temporary and will offset over time. The deferred tax amounts are recorded to allocate the tax expense or benefit to the appropriate accounting periods. Examples show calculating deferred tax liability when tax depreciation exceeds book depreciation, resulting in lower current taxes. Deferred tax amounts are presented separately from other assets/liabilities and not classified as current. Tax rate changes use enacted rates when the deferred amount reverses.
As 22 final,AS 22 has become applicable to all listed companies with effect from 01/04/2001. The AS will also be applicable to all non-listed corporates with effect from 01/04/2002 and all other non-corporate entities with effect from 01/04/2003. Hence, now in financial statements two taxes will be accounted for (a) current income tax and (b) deferred income tax. AS 22 is a measurement standard meaning thereby that it involves accounting along with disclosure requirement in financial statements.
Deferred Tax,
By: Mahima Pahwa (IBS Gurgaon)
Differences between Accounting Income and Taxable Income
TYPES OF DEFERRED TAX
DEFERRED TAX LIABILITY
FINANCIAL STATEMENTS PRESENTATION
As 22 final,AS 22 has become applicable to all listed companies with effect from 01/04/2001. The AS will also be applicable to all non-listed corporates with effect from 01/04/2002 and all other non-corporate entities with effect from 01/04/2003. Hence, now in financial statements two taxes will be accounted for (a) current income tax and (b) deferred income tax. AS 22 is a measurement standard meaning thereby that it involves accounting along with disclosure requirement in financial statements.
Deferred Tax,
By: Mahima Pahwa (IBS Gurgaon)
Differences between Accounting Income and Taxable Income
TYPES OF DEFERRED TAX
DEFERRED TAX LIABILITY
FINANCIAL STATEMENTS PRESENTATION
Understanding IND AS 12 – Accounting for Income Taxes.pptxtaxguruedu
Introduction to IND AS 12 IND AS 12, also known as Accounting for Income Taxes, is a standard issued by the Institute of Chartered Accountants of India (ICAI) that prescribes the principles and methods for accounting for income taxes. This standard applies to all entities that are required to prepare financial statements in accordance with Indian Accounting Standards (IND AS).
/ 69
Prepared by Miranda Dyason
Workshop 5:
Accounting for income tax
/ 69
Calculate taxable profit, and account for current taxation expense;
Explain that some transactions have both current and future tax consequences;
Account for movements in deferred taxation accounts, and changes in tax rates; and
A
B
C
D
Learning Outcomes
1
E Specify the disclosures required by AASB 112.
Explain differences between accounting treatments and taxation treatments for a
range of transactions;
/ 69
Accounting profit v Taxable profit
2
ACCOUNTING TAX
Basis of
accounting
Accruals basis
Principally cash basis (some
exceptions – eg. sales)
Equations Revenue – Expenses
= Accounting profit
Taxable income (TI) – tax
deductions (TD) = Taxable
profit
AASBs and the
Corporations Act are key
sources that determine
the appropriate
accounting treatment of
transactions
The Income Tax Assessment Act
determines the tax treatment of
transactions
/ 69
▸ Permanent differences:
• Arise when amounts recognised as part of accounting profit are not
recognised as part of taxable profit (or vice versa).
▸ Temporary differences:
• Arise when the period in which revenues and expenses are
recognised for accounting purposes is different from the period in
which such revenues and expenses are treated as taxable income
and allowable deductions for tax purposes.
Permanent & temporary differences
3
/ 69
Review questions:
4
Loftus et al (Chapter 12):
• Comprehension question 1:
What is the main principle of tax-effect accounting as
outlined in AASB 112?
/ 69
▸ The tax consequences of transactions that occur for accounting purposes
during a period should be recognised as income or expense during the
current period, regardless of when the tax effects will occur.
▸ This requires identifying the current and future tax consequences of
items recognised in the statement of financial position.
▸ To determine current tax consequences of transactions, we need to
determine the entity’s taxable profit for the year, and associated income
tax payable.
▸ To determine future tax consequences of transactions, we need to look
at the differences between an entity’s Statement of Financial Position
(prepared in accordance with the accounting standards) and its tax-
based Balance Sheet prepared in accordance with income tax
legislation.
The requirements of AASB 112
5
/ 69
Review Question –
Current and future tax consequences
6
Loftus et al (Chapter 12):
• Application and analysis exercise 12.6.
/ 69
Company A: DR CR
Interest revenue
(passive)
100
Cash
101
Share capital
1
Example:
Consider the following draft trial balances...
7
Company B: DR CR
Interest revenue
(passive)
100
Cash
1
Interest receivable
100
Share capital
1
Company C: DR CR
In.
Understanding IND AS 12 – Accounting for Income Taxes.pptxtaxguruedu
Introduction to IND AS 12 IND AS 12, also known as Accounting for Income Taxes, is a standard issued by the Institute of Chartered Accountants of India (ICAI) that prescribes the principles and methods for accounting for income taxes. This standard applies to all entities that are required to prepare financial statements in accordance with Indian Accounting Standards (IND AS).
/ 69
Prepared by Miranda Dyason
Workshop 5:
Accounting for income tax
/ 69
Calculate taxable profit, and account for current taxation expense;
Explain that some transactions have both current and future tax consequences;
Account for movements in deferred taxation accounts, and changes in tax rates; and
A
B
C
D
Learning Outcomes
1
E Specify the disclosures required by AASB 112.
Explain differences between accounting treatments and taxation treatments for a
range of transactions;
/ 69
Accounting profit v Taxable profit
2
ACCOUNTING TAX
Basis of
accounting
Accruals basis
Principally cash basis (some
exceptions – eg. sales)
Equations Revenue – Expenses
= Accounting profit
Taxable income (TI) – tax
deductions (TD) = Taxable
profit
AASBs and the
Corporations Act are key
sources that determine
the appropriate
accounting treatment of
transactions
The Income Tax Assessment Act
determines the tax treatment of
transactions
/ 69
▸ Permanent differences:
• Arise when amounts recognised as part of accounting profit are not
recognised as part of taxable profit (or vice versa).
▸ Temporary differences:
• Arise when the period in which revenues and expenses are
recognised for accounting purposes is different from the period in
which such revenues and expenses are treated as taxable income
and allowable deductions for tax purposes.
Permanent & temporary differences
3
/ 69
Review questions:
4
Loftus et al (Chapter 12):
• Comprehension question 1:
What is the main principle of tax-effect accounting as
outlined in AASB 112?
/ 69
▸ The tax consequences of transactions that occur for accounting purposes
during a period should be recognised as income or expense during the
current period, regardless of when the tax effects will occur.
▸ This requires identifying the current and future tax consequences of
items recognised in the statement of financial position.
▸ To determine current tax consequences of transactions, we need to
determine the entity’s taxable profit for the year, and associated income
tax payable.
▸ To determine future tax consequences of transactions, we need to look
at the differences between an entity’s Statement of Financial Position
(prepared in accordance with the accounting standards) and its tax-
based Balance Sheet prepared in accordance with income tax
legislation.
The requirements of AASB 112
5
/ 69
Review Question –
Current and future tax consequences
6
Loftus et al (Chapter 12):
• Application and analysis exercise 12.6.
/ 69
Company A: DR CR
Interest revenue
(passive)
100
Cash
101
Share capital
1
Example:
Consider the following draft trial balances...
7
Company B: DR CR
Interest revenue
(passive)
100
Cash
1
Interest receivable
100
Share capital
1
Company C: DR CR
In.
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
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Model Attribute Check Company Auto PropertyCeline George
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Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
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Acetabularia acetabulum is a single-celled green alga that in its vegetative state is morphologically differentiated into a basal rhizoid and an axially elongated stalk, which bears whorls of branching hairs. The single diploid nucleus resides in the rhizoid.
The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
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The Roman Empire, a vast and enduring power, stands as one of history's most remarkable civilizations, leaving an indelible imprint on the world. It emerged from the Roman Republic, transitioning into an imperial powerhouse under the leadership of Augustus Caesar in 27 BCE. This transformation marked the beginning of an era defined by unprecedented territorial expansion, architectural marvels, and profound cultural influence.
The empire's roots lie in the city of Rome, founded, according to legend, by Romulus in 753 BCE. Over centuries, Rome evolved from a small settlement to a formidable republic, characterized by a complex political system with elected officials and checks on power. However, internal strife, class conflicts, and military ambitions paved the way for the end of the Republic. Julius Caesar’s dictatorship and subsequent assassination in 44 BCE created a power vacuum, leading to a civil war. Octavian, later Augustus, emerged victorious, heralding the Roman Empire’s birth.
Under Augustus, the empire experienced the Pax Romana, a 200-year period of relative peace and stability. Augustus reformed the military, established efficient administrative systems, and initiated grand construction projects. The empire's borders expanded, encompassing territories from Britain to Egypt and from Spain to the Euphrates. Roman legions, renowned for their discipline and engineering prowess, secured and maintained these vast territories, building roads, fortifications, and cities that facilitated control and integration.
The Roman Empire’s society was hierarchical, with a rigid class system. At the top were the patricians, wealthy elites who held significant political power. Below them were the plebeians, free citizens with limited political influence, and the vast numbers of slaves who formed the backbone of the economy. The family unit was central, governed by the paterfamilias, the male head who held absolute authority.
Culturally, the Romans were eclectic, absorbing and adapting elements from the civilizations they encountered, particularly the Greeks. Roman art, literature, and philosophy reflected this synthesis, creating a rich cultural tapestry. Latin, the Roman language, became the lingua franca of the Western world, influencing numerous modern languages.
Roman architecture and engineering achievements were monumental. They perfected the arch, vault, and dome, constructing enduring structures like the Colosseum, Pantheon, and aqueducts. These engineering marvels not only showcased Roman ingenuity but also served practical purposes, from public entertainment to water supply.
2024.06.01 Introducing a competency framework for languag learning materials ...Sandy Millin
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Published classroom materials form the basis of syllabuses, drive teacher professional development, and have a potentially huge influence on learners, teachers and education systems. All teachers also create their own materials, whether a few sentences on a blackboard, a highly-structured fully-realised online course, or anything in between. Despite this, the knowledge and skills needed to create effective language learning materials are rarely part of teacher training, and are mostly learnt by trial and error.
Knowledge and skills frameworks, generally called competency frameworks, for ELT teachers, trainers and managers have existed for a few years now. However, until I created one for my MA dissertation, there wasn’t one drawing together what we need to know and do to be able to effectively produce language learning materials.
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2. Interperiod Tax Allocation
A Deferred Tax Liability arises when the income tax payable calculated for the tax
return is less than the tax calculated by the accounting records.
A Deferred Tax Asset is created when the income tax payable calculated for the tax
return is more than the tax calculated by the accounting records.
In both cases the allocation is for a temporary difference. The amount will offset over
time.
For permanent differences the Income Tax Expense calculation should not take into
account the permanent difference. A permanent difference represents a case where
something is recorded as an expense in the accounting records but is not allowed as a
deduction for tax purposes.
4. Examples of Temporary Differences
between Book Income and Taxable
Income, continued
14-4
5. Income Tax
Statement Return Difference
Revenues 1,000,000
$ 1,000,000
$ -
$
Less:
Depreciation 200,000 320,000 (120,000)
Other expenses 650,000 650,000 -
Income before taxes 150,000
$ 30,000
$ 120,000
$
× Tax rate 30% 30% 30%
Income taxes 45,000
$ 9,000
$ 36,000
$
Normally for Income Taxes
Returns the depreciation is
accelerated and is more than the
amount calculated for
accounting.
6. Income Tax
Statement Return Difference
Revenues 1,000,000
$ 1,000,000
$ -
$
Less:
Depreciation 200,000 320,000 (120,000)
Other expenses 650,000 650,000 -
Income before taxes 150,000
$ 30,000
$ 120,000
$
× Tax rate 30% 30% 30%
Income taxes 45,000
$ 9,000
$ 36,000
$
As Depreciation expense is more
in the tax return the amount of
tax paid is less. This difference is
your deferred tax liability, as it
will be paid later.
7. The entry to record the deferred taxes
would appear as follows:
GENERAL JOURNAL Page 77
Date Description
Post.
Ref. Debit Credit
2003
Dec. 31 Income Tax Expense 45,000
Deferred Tax Liability 36,000
Income Taxes Payable 9,000
8. Description Debit Credit
Income tax expense 150,000
Deferred tax asset 45,000
Income tax payable 195,000
When the tax payable for income tax is more that the
accounting tax payable, then you have a deferred tax asset.
9. Presentation
These should be presented separately from other assets and liabilities in the
statement of financial position. Deferred tax assets and liabilities should be
distinguished from current tax assets and liabilities. In addition, deferred tax
assets/liabilities should not be classified as current assets/liabilities, where an
entity makes such a distinction.
The tax expense (income) related to the profit or loss from ordinary activities
should be shown in the statement of profit or loss.
10. Concluding Remarks
Loss carrybacks or carry forwards are the situation where you can take a Net
Loss backwards to get an income tax refund or carry a loss forward to reduce
your tax liability. This is a more complicated calculation as it involves different
tax rates over different periods.
11. Global Vantage Point: Reporting
Income Taxes
Difference GAAP IFRS (IAS 12)
Tax law changes Uses the enacted rate schedule to be in
effect when the deferred tax asset or
deferred tax liability reverses
Requires firms to use the enacted
or substantively enacted tax rate
Approach for recognizing
deferred tax assets when
realizability is uncertain
• Uses valuation account for deferred tax
asset if book basis is different from the
tax basis
• Review at end of period and increase
valuation account as necessary
• Reduction cannot be reversed
• No valuation account is used
• Recognize deferred tax assets
only if probable that they will
be realized
• Review at end of period and
reduce as necessary
• Reduction can be reversed
Reconciliation of
statutory and effective tax
rates
Uses the domestic federal statutory rate
as starting point
Use the domestic federal statutory
rate or statutory rate that
aggregates domestic rates in
various jurisdictions
14-11
12. Global Vantage Point: Reporting
Income Taxes, continued
Difference GAAP IFRS (IAS 12)
Offsetting deferred tax
assets and deferred tax
liabilities
Net deferred tax assets and liabilities
from the same taxing jurisdiction against
each other
Net deferred tax assets and
deferred tax liabilities only if two
very stringent conditions are met
Disclosure of income tax
amount recognized
directly in equity
Not required Disclose the aggregate amount of
current or deferred income tax
income or expense to Other
Comprehensive Income
Uncertain tax positions Extensive guidance No specific guidance; tax assets
and liabilities are measured at the
amount expected to be paid; recognize
contingent liability under certain
conditions
14-12