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Chapter 19: Q1IFRS (page 1114)

Where can authoritative IFRS related to the accounting for taxes be found?

Short Answer

Expert verified

Authoritative IFRS related to income tax found in IAS 12.

Step by step solution

01

Meaning of IFRS

International Financial Reporting Standards are a collection of accounting standards produced by the International Accounting Standards Board, a non-profit organization (IASB). It is a collection of globally agreed accounting standards that lays out the rules and procedures

02

Explaining where authoritative IFRS can relate to the accounting for taxes be found.

The detailed description of Income Tax has defined in IAS 12. A business's tax responsibility to the government in which it operates is known as "income tax payable." A business's profits will determine the amount owed over a given period and the tax rates imposed.Tax payable is a debt that must be paid within the next 12 months. Thus, it is not considered a long-term responsibility but rather a current one.

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Most popular questions from this chapter

What are the two objectives of accounting for income taxes?

Question: Interest on municipal bonds is referred to as a permanent difference when determining the proper amount to report for deferred taxes. Explain the meaning of permanent differences, and give two other examples.

Jennifer Capriati Corp. has a deferred tax asset account with a balance of \(150,000 at the end of 2016 due to a single cumulative temporary difference of \)375,000. At the end of 2017, this same temporary difference has increased to a cumulative amount of \(450,000. Taxable income for 2017 is \)820,000. The tax rate is 40% for all years. No valuation account related to the deferred tax asset is in existence at the end of 2016. Instructions (a) Record income tax expense, deferred income taxes, and income taxes payable for 2017, assuming that it is more likely than not that the deferred tax asset will be realized. (b) Assuming that it is more likely than not that $30,000 of the deferred tax asset will not be realized, prepare the journal entry at the end of 2017 to record the valuation account.

Pretax financial income for Lake Inc. is \(300,000, and its taxable income is \)100,000 for 2018. Its only temporary difference at the end of the period relates to a $70,000 difference due to excess depreciation for tax purposes. If the tax rate is 40% for all periods, compute the amount of income tax expense to report in 2018. No deferred income taxes existed at the beginning of the year.

Callaway Corp. has a deferred tax asset account with a balance of \(150,000 at the end of 2017 due to a single cumulative temporary difference of \)375,000. At the end of 2018, this same temporary difference has increased to a cumulative amount of \(500,000. Taxable income for 2018 is \)850,000. The tax rate is 40% for all years.

Instructions

(a)Record income tax expense, deferred income taxes, and income taxes payable for 2018, assuming that it is probable that the deferred tax asset will be realized.

(b) Assuming that it is probable that $30,000 of the deferred tax asset will not be realized, prepare the journal entry at the end of 2018 to recognize this probability.
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