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IAS 12: Income Taxes (P/l (movement in deffered tax (eliminates time…
IAS 12: Income Taxes
P/l
Current year estimate
based on taxable profit for the year
DR Tax Expense
CT Tax liability
prior year adjustment
adjust going forward
under provision
over provision
no impact on SOFP
movement in deffered tax
eliminates time difference between capital allowance and depreciation
pay less tax in early years of asset life, will be recouped later
deferred tax liability
temporary difference x tax rate
either P/l or equity
capital allowance
account for deferred tax liability as tax expense in current year
revaluations
tax differences taken to equity
SOFP
Y/e liability based on current estimate
y/e deferred tax liability