IAS12 - INCOME TAXES
NOTE : The defferred tax asset / liability is stated at the tax rate (28% usually)
Asset / liability carrying amount tax base Temp. diff.
cost
Dep./annual allowance
carrying amount/ tax base
DEFFERED TAX LIABILITY DEFFERED TAX ASSET
Rule 1 : Carrying amount of the asset > tax base of Rule 3 : Carrying amount of the asset < tax base of
the asset = DEFFERED TAX LIABILITY (SFP) the asset = DEFFERED TAX ASSET (SFP)
Rule 2: Carrying amount of the liability < tax base Rule 4: Carrying amount of the liability > tax base
of the liability = DEFFERED TAX LIABILITY (SFP) of the liability = DEFFERED TAX ASSET (SFP)
Journal Entry Journal Entry
DR : Deffered tax expense (P/L) DR : Deffered tax asset (SFP)
CR: Deffered tax liability (SFP) CR: Deffered tax (P/L)
Provision made for deffered tax expense Provision made for deffered tax
PRE- PAYMENTS INCOME RECEIVED IN ADVANCE
PROVISIONS FOR WARRANTY COSTS
EXEMPT DIFFERENCES TAX LOSSES
* The initial recognition of goodwill * The tax loss is treated as a tax asset in the year
* Not a business comb. & at the time of the trans. the loss is occurred, the tax loss can be taken
doesn’t affect the acc. or the taxable profit/loss against profits in the future.
Examples : assets that weren't bought in the curr.
year & have no tax allow. REVERSAL JOURNAL:
dividends, fines & donations DR : Deffered tax expense (P/L) (28% !!!)
FORMULA CR : Deffered tax asset (SFP)
Profit before tax Utilisation of the tax loss from the previous year
Exempt differences in the current year.
Profit after exempt differences ASSETS BOUGHT ON CREDIT
Temporary differences * You need to do the top calc. to determine which is
Depreciation > the carrying amount or the tax base of the asset
Tax allowance purchased & raise the tax asset or liability.
Taxable profit * The carrying amount and the tax base of the
Assessed tax losses carried forward liability is = & no temp. diff. exists for the liability.
Taxable profit for the year
current tax at 28%
DISCLOSURE
STATEMENT OF P/L & OCI for the year ended … STATEMENT OF FINANCIAL POSITION AS AT …
Notes Notes
Profit before tax comparitive ASSETS/LIABILITIES comparitive
Income tax expense 3 years * years *
Profit for the year Non-current assets/ Non-current 4
Total comp. income for the year liabilities
Deffered tax
Current assets / Current liabilities
SA Revenue Services - Normal
SA Revenue Services - VAT
NOTE : The defferred tax asset / liability is stated at the tax rate (28% usually)
Asset / liability carrying amount tax base Temp. diff.
cost
Dep./annual allowance
carrying amount/ tax base
DEFFERED TAX LIABILITY DEFFERED TAX ASSET
Rule 1 : Carrying amount of the asset > tax base of Rule 3 : Carrying amount of the asset < tax base of
the asset = DEFFERED TAX LIABILITY (SFP) the asset = DEFFERED TAX ASSET (SFP)
Rule 2: Carrying amount of the liability < tax base Rule 4: Carrying amount of the liability > tax base
of the liability = DEFFERED TAX LIABILITY (SFP) of the liability = DEFFERED TAX ASSET (SFP)
Journal Entry Journal Entry
DR : Deffered tax expense (P/L) DR : Deffered tax asset (SFP)
CR: Deffered tax liability (SFP) CR: Deffered tax (P/L)
Provision made for deffered tax expense Provision made for deffered tax
PRE- PAYMENTS INCOME RECEIVED IN ADVANCE
PROVISIONS FOR WARRANTY COSTS
EXEMPT DIFFERENCES TAX LOSSES
* The initial recognition of goodwill * The tax loss is treated as a tax asset in the year
* Not a business comb. & at the time of the trans. the loss is occurred, the tax loss can be taken
doesn’t affect the acc. or the taxable profit/loss against profits in the future.
Examples : assets that weren't bought in the curr.
year & have no tax allow. REVERSAL JOURNAL:
dividends, fines & donations DR : Deffered tax expense (P/L) (28% !!!)
FORMULA CR : Deffered tax asset (SFP)
Profit before tax Utilisation of the tax loss from the previous year
Exempt differences in the current year.
Profit after exempt differences ASSETS BOUGHT ON CREDIT
Temporary differences * You need to do the top calc. to determine which is
Depreciation > the carrying amount or the tax base of the asset
Tax allowance purchased & raise the tax asset or liability.
Taxable profit * The carrying amount and the tax base of the
Assessed tax losses carried forward liability is = & no temp. diff. exists for the liability.
Taxable profit for the year
current tax at 28%
DISCLOSURE
STATEMENT OF P/L & OCI for the year ended … STATEMENT OF FINANCIAL POSITION AS AT …
Notes Notes
Profit before tax comparitive ASSETS/LIABILITIES comparitive
Income tax expense 3 years * years *
Profit for the year Non-current assets/ Non-current 4
Total comp. income for the year liabilities
Deffered tax
Current assets / Current liabilities
SA Revenue Services - Normal
SA Revenue Services - VAT
