Income Tax (IAS12) - Essay Example

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Income Tax (IAS12)

Their main agenda was to look at critical issues of accounting for corporate income in an attempt to develop a discussion paper on the principles of IAS 12 and set out proposals. IAS 12 prohibits companies to give an account to deferred taxes by using the deferral method based on the income statement. It instead prefers the passive methodology based on the balance sheet. In addition to the above requirement, the standard requires corporations to acknowledge either a deferral tax liability. Thirdly, IAS 12 requires recognition of deferred tax assets when it is certain that a corporation possess revenues in future to realize deferred tax asset. For instance, given that a company has a history of losses it will recognize deferred tax assets to the extent that taxable temporary expenses in amounts are sufficient. “Fourthly, IAS 12 does not allow asset credit and delayed tax liabilities brought about by types of material goods and liabilities whose books vary in amounts at the moment of acknowledgment” (IAS - 12). The other requirement is that IAS 12 prohibits recognition of deferred tax liabilities, and those liabilities encountered or arising from adjustments for conversion so long as it satisfies two conditions: The main investor is capable of controlling the timing of reversal’s temporary difference. ...Show more

Summary

Income Tax (IAS12) Name: Tutor: Date: Income Tax (IAS12) Is IAS12 too difficult to apply and understand? International Accounting Standards 12 continues to receive numerous criticisms on applicability and usefulness of numbers in accounting for corporate income taxes…
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