What is the title of IAS 12?

What is the title of IAS 12?

Income Taxes
IAS 12: Income Taxes is part of the International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS). IAS 12 sets the accounting treatment of all taxable profits and losses, both national and foreign.

What is a permanent difference IAS 12?

A permanent difference is the difference between the tax expense and tax payable caused by an item that does not reverse over time. In other words, it is the difference between financial accounting and tax accounting that is never eliminated.

Why is IAS 12 important?

IAS 12 prescribes the accounting treatment for income taxes. Income taxes include all domestic and foreign taxes that are based on taxable profits. Current tax for current and prior periods is, to the extent that it is unpaid, recognised as a liability. Overpayment of current tax is recognised as an asset.

Is it mandatory to calculate deferred tax?

There are no strict rules for deferred tax calculation as it is merely the difference between gross profit in a Profit & Loss Account and a tax statement.

When was DTA created?

Deferred tax liability is created only when the timing differences originate in the tax holiday period and reverse after the tax holiday. Adjustments are done on the basis of the FIFO method. *Fully reversed after the tax holiday period. The total DTL balance at the end of the second year will be 126,000.

What is the scope of IAS 12?

Scope of IAS 12 – overview IAS 12 prescribes accounting for income taxes (current and deferred). Income taxes include all domestic and foreign taxes which are based on taxable profits (IAS 12.2). Taxes other than income taxes are accounted for under other IFRS, e.g. IAS 37 or IAS 19 (payroll taxes).

Is bad debt a permanent or temporary difference?

Bad debt expense creates a temporary difference between accounting income and taxable income.

Which of the following is out of the scope of IAS 12?

Investment tax credits are excluded from the scopes of IAS 12 (IAS 12.4) and IAS 20 (IAS 20.20) and thus are effectively not covered by IFRS. Entities can therefore develop their own accounting policy as set out in IAS 8.

Why is deferred tax necessary?

A deferred tax liability represents an obligation to pay taxes in the future. The obligation originates when a company or individual delays an event that would cause it to also recognize tax expenses in the current period.

Do you pay deferred tax?

What is deferred tax? In its most basic form, deferred tax is just that – a tax that you pay in a later accounting period instead of the present one. You’re shifting the tax burden from the current year into future years.

Is Depreciation a DTA or DTL?

If the income as per books is more than taxable income then it means that we have paid less tax as per book’s income and we have to pay more tax in future and thus recorded as Deferred Tax Liability (DTL)….What is Deferred Tax Asset and Deferred Tax Liability (DTA & DTL)

Year	Depreciation @ 20%	Depreciation @ 15%
12	1,717.99	2,510.15
13	1,374.39	2,133.63

Is Depreciation a DTA?

Depreciation expenses can generate deferred tax liabilities. A deferred tax asset means that the business will have more expenses on the tax return in future years, when compared to the accounting records. More expense not only reduces taxable income, but also future tax liability.