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INCOME TAXES
IAS 12 Objectives
• IAS 12 requires an entity to account for the tax consequences of transactions
and other events in the same way that it accounts for the transactions and
other events themselves.
• Thus for transactions and other events recognised in the statement of profit
or loss and other comprehensive income, any related tax effects are also
recognised in the statement of profit or loss and other comprehensive
income, except for transactions and other events recognised directly in
equity. The tax effect relating to those transactions must be recognised
directly in equity.
• IAS 12 refers to the statement of financial position approach. This method
requires that deferred tax be measured on the difference between:
• the carrying amount of the entity's assets and liabilities; and
• the tax base of each of the entity’s assets and liabilities.
