AC2101 S1 2014 Seminar 13 & 14 Deferred Tax (Anil).pptx

taxable income prot before tax current temporary

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Unformatted text preview: entire life as tax & accounting rules eventually play out the same way 3.  Different in a tax/financial period as tax rules differ from accounting rules 4.  Different over an entity’s entire life as tax rules differ from accounting rules 9 Recall from the last seminar and from FRS 12, there are 3 steps… *  Step 1: Prepares tax computation to determine the current tax payable *  Step 2: Uses information in the balance sheet [and other sources, if applicable] to determine temporary differences to compute the deferred tax liability/asset *  Step 3: Tax expense (Tax income) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax (FRS 12 para 5). 10 5 Illustration 1 *  CASE OF ENTITY BB Ltd: *  Which items are permanent differences? *  Which items are temporary differences? *  Step 1: Prepare Tax Computation to derive current tax payable. *  Taxable income = Profit before tax +/- Current Temporary Differences +/- Permanent differences *  Current tax payable = Current tax rate * Taxable income Dr Current Tax Expense/Inco...
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This document was uploaded on 02/10/2014.

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