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IAS 12 – INCOME TAX - Coggle Diagram

- - - - Over-optimistic dividend payments
      - Distortion of earnings per share, price/earnings
      - Shareholders being misled.
  - - - The figure of profit before
      - Reported to the shareholders in the published accounts
    - - The figure of profit
      - The taxation authorities base their tax calculations on which
  - - - By certain items not being taxable/allowable
      - Only impact on the tax computation of
        one period
      - Have no deferred tax consequences
        whatever.
    - - Differences between
        
        Carrying amount
        
        Asset
        
        Liability
        
        Tax base ((the amount attributed to asset or liability for tax purposes)
      - Accounting entries
        
        Deferred tax = temporary difference × tax rate.
        
        Increase in deferred tax provision
        
        Dr Income tax expense/OCI
        
        Cr Deferred tax (SFP)
        
        Reduction in deferred tax provision
        
        Dr Deferred tax (SFP)
        
        Cr Income tax expense/OCI
  - - - Carrying amount changes
      - Tax base remains unaffected
- - - - Substantively enacted
      - By the reporting date
      - Enacted