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    Pas 12 - Income Taxes

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    blesieq
    pas

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    Pas 12 - Income Taxes

    Uploaded by

    blesieq
    7 views6 pages
    pas

    Original Title

    PAS-12_INCOME-TAXES

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    pas

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    7 views6 pages

    Pas 12 - Income Taxes

    Uploaded by

    blesieq
    pas

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 6

    CONCEPTUAL FRAMEWORK

    &
    ACCOUNTING STANDARDS

    Lecture Aid
    By: Zeus Vernon B. Millan

    1
    PAS 12 Income Taxes

    Learning Objectives

    • Understand the scope and the fundamental


    principle of PAS 12.
    • Interpret the terminology used in the accounting
    for current and deferred taxes.
    • State the recognition, measurement and
    presentation of current and deferred taxes.

    Conceptual Framework & Acctg.


    2
    Standards (by: Zeus Vernon B. Millan)
    Accounting profit vs. Taxable profit

    • The varying treatments of economic activities between the PFRSs


    and tax laws result to permanent and temporary differences.

    Conceptual Framework & Acctg.


    3
    Standards (by: Zeus Vernon B. Millan)
    Permanent differences
    • Permanent differences are those that do not have future tax
    consequences.
    • Examples:
    a. Interest income on government bonds and treasury bills
    b. Interest income on bank deposits
    c. Dividend income
    d. Fines, surcharges, and penalties arising from violation of law
    e. Life insurance premium on employees where the entity is the
    irrevocable beneficiary
    Conceptual Framework & Acctg.
    4
    Standards (by: Zeus Vernon B. Millan)
    Temporary differences
    • Temporary differences are those that have future tax consequences.
    Temporary differences are either:
    a. Taxable temporary differences – arise, for example, when
    financial income is greater than taxable income or the carrying
    amount of an asset is greater than its tax base.
    b. Deductible temporary differences arise in case of the opposites of
    the foregoing.
    • Taxable temporary differences result to deferred tax liabilities
    while deductible temporary differences result to deferred tax
    assets.
    Conceptual Framework & Acctg.
    5
    Standards (by: Zeus Vernon B. Millan)
    Deferred taxes

    • If the increase in deferred tax liability exceeds the increase in


    deferred tax asset, the difference is deferred tax expense. If it is
    the opposite, the difference is deferred tax income or benefit.
    • A deferred tax asset is recognized only to the extent that it is
    realizable.
    • Deferred taxes are measured using enacted or substantially enacted
    tax rates that are applicable to the periods of their expected reversals.
    • Deferred tax assets and liabilities are not discounted.
    • Deferred tax asset and liabilities are presented as non-current.

    Conceptual Framework & Acctg.


    6
    Standards (by: Zeus Vernon B. Millan)

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