Page 142 - Finac1 Test 1 slides
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INCOME TAXES
Changes in Tax rate
• Current and deferred tax rates may be different
• Current tax –Use rate that is expected to applied when tax is
actually paid
• Deferred tax –Use tax rate expected to apply when asset is
recovered or liability settled
• When there is a change in tax rate
• D/T balances were recorded at the old rate
• Need to be recalculated at new rate
• Differences taken to P/L
• Unless they originated in OCI
• Change in tax rate is disclosable
• IAS 12.80(d) – D/T expense / income due to rate change
• IAS 12.81(d) – Narrative detailing that a rate change occurred
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