PAS 12 INCOME TAXES

NATURE:
DTA is applicable to all entity (public or not))
Accounting Income Taxable Income

Financial income Income for the period determined under

Net income for period before income tax taxation authorities
expense Appears in ITR

DEFINITION AND RECOGNITION:

Deferred Tax Asset:
- Amount of income tax recoverable in future period
- A deferred tax consequence attributable to future deductible amount or deductible
temporary differences and operating loss carry forward.
- Recognize for all deductible temporary differences and operating loss carryforward
when probable that taxable income will be available against which deferred tax asset
can be used.
Permanent Difference

1. Nontaxable revenue (-)

2. Nondeductible Expense (+)

Temporary Difference
 PAS 12 INCOME TAXES
1. Future Taxable Amount (-)

Future Taxable Amount * Income Tax Rate = Deferred Tax Liability

Income statement approach – net income Balance Sheet Approach – capital is

is overstated overstated

Income- Accounting > Tax Asset – accounting > tax

Expense Accounting < Tax Liability – accounting < Tax

2. Future deductible amount (+)

Future Deductible Amount * Income Tax Rate = Deferred Tax Asset

Income statement approach - net income Balance Sheet Approach capital is

is understated understated

Income- Accounting <Tax Asset – accounting < Tax

Expense Accounting > Tax Liability – accounting > Tax

Taxable Temporary Differences

INCOME TAX EXPENSE

MEASUREMENT of current tax liability and current tax asset:

- Tax rate that has been enacted and effective at the end of the reporting period
Deferred Tax Asset/Liability measurement “future enacted tax rate”
o Tax rate enacted by end of reporting period and expected to apply to the
period when asset is realized, and liability is settled.
 PAS 12 INCOME TAXES
TRANSACTION *on activity next page

PRESENTATION
DTL – noncurrent liability They are not discounted
DTA – noncurrent asset
Offsetting is applicable when
a. They relate to income taxes levied by the same taxing authority
b. Has legal enforceable right to set off a current tax asset against current tax liability

REVALUATION OF ASSET
- Not a taxable event but would lead to taxable amount
- Its difference from depreciation base on cost (CA) to base on revalued amount will
be temporary difference
- Upward revaluation – DTL
- Revaluation surplus and Deferred Tax Consequence = component of OCI
INTRAPERIOD TAX ALLOCATION INTERPERIOD TAX ALLOCATION
- Recognition of a deferred tax asset
- Allocation of income tax expense to or deferred tax liability
various revenues that brough about
the tax
- Associates tax expense with the
items in the income statement

DISCLOSURE