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    Meigs Pastor
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    This document defines key terms related to accounting for income taxes under IAS 12. It discusses the differences between accounting profit/loss and taxable profit/loss. It also defines current tax, deferred tax liabilities, deferred tax assets, permanent differences and temporary differences. Temporary differences can be either taxable temporary differences, which lead to deferred tax liabilities, or deductible temporary differences, which lead to deferred tax assets.

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    This document defines key terms related to accounting for income taxes under IAS 12. It discusses the differences between accounting profit/loss and taxable profit/loss. It also defines current tax, deferred tax liabilities, deferred tax assets, permanent differences and temporary differences. Temporary differences can be either taxable temporary differences, which lead to deferred tax liabilities, or deductible temporary differences, which lead to deferred tax assets.

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    © All Rights Reserved
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    37 views2 pages

    Reviewer in Internediate

    Uploaded by

    Meigs Pastor
    This document defines key terms related to accounting for income taxes under IAS 12. It discusses the differences between accounting profit/loss and taxable profit/loss. It also defines current tax, deferred tax liabilities, deferred tax assets, permanent differences and temporary differences. Temporary differences can be either taxable temporary differences, which lead to deferred tax liabilities, or deductible temporary differences, which lead to deferred tax assets.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 2

    Income Taxes 6.

    Deferred tax assets – the amounts of


    income taxes recoverable in future periods
     There is a difference of recognizing
    in
    Income in FRS and Tax Laws
    respect of:
    a. deductible temporary differences;
    Terms in IAS12
    b. the carry-forward of unused tax losses;
    and
    1. Accounting profit – profit or loss for a c. the carry-forward of unused tax credits.
    period before deducting tax expense.

    7. Permanent differences – Permanent


    2. Taxable profit (tax loss) – the profit (loss) differences between the financial profit and
    for a period, determined in accordance with taxable profit arise when income is not
    the taxable or expenses are not allowed for tax.
    rules established by the taxation
    authorities, upon which income taxes are
    8. Temporary differences – differences
    payable (recoverable).
    between the carrying amount of an asset or
    liability in the statement of financial
    position and its tax base.
    3. Tax expense (tax income) – the aggregate
    amount included in the determination of
    profit or loss for the period in respect of
    a. taxable temporary differences, which are
    current tax and deferred tax.
    temporary differences that will result in
    taxable amounts in determining taxable
    profit (tax loss) of future periods when the
    4. Current tax – the amount of income taxes
    carrying amount of the asset or liability is
    payable (recoverable) in respect of the
    recovered or settled; or
    taxable profit (tax loss) for a period.

    5. Deferred tax liabilities – the amounts of


    income taxes payable in future periods in
    respect of taxable temporary differences.
    FI > TI  Taxable temporary differences will
    lead to Deferred Tax Liability “
    - Income not yet recognized in tax laws
    Taxable in future period ( according
    - Expense already deducted in tax laws to tax laws )“

    FI > TI  Deductible temporary differences will


    - If Accounting Profit Is P10,000 and Taxable lead to Deferred Tax Assets “
    Income is P8,000 Deductible in future period
    ( according to tax laws ) “
    - The difference (P2,000 ) will be taxable in
    the future

    b. deductible temporary differences, which


    are temporary differences that will result in
    amounts that are deductible in determining
    taxable profit (tax loss) of future periods
    when the carrying amount of the asset or
    liability is recovered or settled.

    TI > FI
    - Income already recognized in tax laws
    - Expense not yet deducted in tax laws

    TI > FI
    - If Accounting Profit Is P10,000 and Taxable
    Income is P13,000
    - The difference ( P3,000 ) will be deductible
    in the future

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