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橡皮英语Accounting for deferred taxes under NZ IAS 12
英国中学留学费用临时性A “balance sheet”approach
The most significant change in NZ IAS 12 from SSAP-12 is that the basis ud to account for deferred taxes follows a balance sheet approach as oppod to an income statement approach. To calculate deferred taxes under the balance sheet approach, we must determine an entity’s temporary differences. Temporary differences are the differences between the carrying amount of an ast or liability in the balance sheet and its tax ba (i.e., the amount attributed to the same ast or liability for tax purpos).
In contrast, to calculate deferred taxes under the income statement approach, we must determine an entity’s timing differences. Timing differences ari when revenue and expen items are recognized in the calculation of accounting profit before or after they are included in the calculation of taxable profit.
The focus of the deferred tax calculation in the balance sheet approach is on items that appear in the b
alance sheet, while for the income statement approach it is on items that appear in the income statement. However, since the income statement is a by-product of the balance sheet, all timing differences by definition must be a component of temporary differences (e paragraph 17 of NZ IAS 12 which hints at this point).
In some situations, the amount of temporary differences will equal the amount of timing differences in a period. However, the amount of timing differences cannot be greater than the amount of temporary differences. This is becau not all ast and liability items in the balance sheet necessarily have an effect that pass through the income statement and which would impact on deferred taxes. For example, a temporary difference, but not a timing difference, can ari when an ast is revalued upwards (with the increment in value recognized in equity and not in the income statement), but there is no equivalent adjustment made for tax purpos (e later for a
more detailed discussion of how this is accounted for under NZ IAS 12).
Therefore, the main conquence of the balance sheet approach for entities when they adopt NZ IAS 12 is that it can capture a much wider range of items that will give ri to the recognition of deferred taxes in the financial statements. Further, the change to a balance sheet approach is consis
tent with the ast-liability orientation to financial reporting that is advocated for by the International Accounting Standards Board in its “Framework for the Preparation and Prentation of Financial Statements”and the New Zealand Institute of Chartered Accountants (formerly the Institute of Chartered Accountants of New Zealand) in its “Statement of Concepts for General Purpo Financial Reporting.”
Recognition of all temporary differences-no “partial” recognition
NZ IAS 12 requires a deferred tax liability to be recognized for all taxable temporary differences. Taxable temporary differences result in taxable amounts that impact the taxable profit of future periods when the carrying amount of an ast or liability is recovered or ttled. Further, NZ IAS 12 requires a deferred tax ast to be recognized for all deductible temporary differences, although this is subject to certain criteria. Deductible temporary differences result in amounts that are deductible in determining the taxable profit of future periods when the carrying amount of an ast or liability is recovered or ttled. Therefore, while some very limited exceptions apply, the requirement in NZ IAS 12 is that all temporary differences (taxable and deductible) are to be recognized as deferred taxes (liability and ast, respectively) in the financial statements.
In general, when all temporary differences are recognized as deferred tax, this is often referred to as tax effect accounting under a “comprehensive”basis. When only some, but not all, temporary differences are recognized as deferred tax, this is often referred to as tax effect accounting under a “partial”basis. Using this terminology and distinction, NZ IAS 12 can be viewed as following a comprehensive basis. On the other hand, SSAP-12 allows entities the choice to recognize deferred taxes either under a comprehensive basis or under a partial basis, although the preferred option is comprehensive. As such, this provides a significant variation between the two
accounting standards becau the partial basis is not allowed in NZ IAS 12.放声大笑
sddsBy and large the partial basis aro out of concerns regarding the recognition of deferred tax liabilities when tax effect accounting under the comprehensive basis was ud. The concerns centre on the issue of whether taxable temporary differences “rever”. There are situations where the temporary differences created under the comprehensive basis may cau an entity to report on its balance sheet a deferred tax liability that appears never to be ttled and which may be ever growing in nature. This can occur if an entity has high investments and/or a policy of continually investing in depreciable asts. In such a ca, the taxable temporary differences may not rever becau new temporary differences are created and recognized that more than offt any reversing t
emporary differences from a prior period. Hence, this gives the impression that ttlement of the deferred tax liability can be postponed indefinitely. The partial basis would overcome this concern by recognizing as deferred taxes in the financial statements only tho temporary differences that are expected to have a future cash flow effect (i.e., tho that are expected to rever).a capella
While many New Zealand entities currently u the comprehensive basis and recognize all timing differences as deferred tax, NZ IAS 12 will cast that net wider by requiring all temporary differences to be recognized. The effect of this on entities will be small if the total amount of temporary differences is similar to the total amount of timing differences. But the effect could be substantial for entities that currently u the partial basis under SSAP-12 and have a history of not recognizing deferred taxes from all timing differences. The unrecognized amounts will now have to be recognized, and for some entities, this will not be a trivial exerci. To illustrate, consider what happened to Air New Zealand when it reported a change in its accounting policy for income taxes from the partial basis to the comprehensive basis for its financial year ending 2000, albeit under the requirements of SSAP-12. The financial effect of doing so incread Air New Zealand’s deferred tax liability by $786 million, an amount that had previously been unrecognized. It also significantly contributed to Air New Zealand’s bottom line net loss of$600 million and substantially incread its debt to total asts ratio from 34 to 66 percent for its 2000
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financial year. Interestingly, Air New Zealand cited that its main reason for changing to the comprehensive basis was to bring its books in line with international accounting standard trends. More recently, Wong and Wong6 provide descriptive evidence that deferred taxes from unrecognized timing differences from a sample of New Zealand’s largest companies in 2002 and 2003 are not small.
NZ IAS 12’s requirement to recognize all temporary differences as deferred tax will fuel further debate on the merits of tax effect accounting under the comprehensive and partial bas. The resolution of this debate is far from certain, especially given recent rearch findings that entities choo partial over the comprehensive basis becau it provides more accurate and relevant information about the deferred tax figures prented in the financial statements when there are temporary differences that are not expected to rever.
Deferred tax asts
四级成绩查询 身份证NZ IAS 12 and SSAP-12 both allow the recognition of deferred tax asts. However, the recognition conditions in NZ IAS 12 differ from tho in SSAP-12. In NZ IAS 12, the recognition of a deferred tax ast depends on “the extent that it is probable that taxable profit will be available against which the
deductible temporary difference can be utilized”(paragraph 24 of NZ IAS 12). In SSAP-12, the recognition of a deferred tax ast depends on “the extent that there is virtual certainty of its recovery in future periods”(paragraph 4.20 of SSAP-12). Hence, the recognition conditions in NZ IAS 12 regarding deferred tax asts appear to be less stringent than tho in SSAP-12.
The main conquence of this change in NZ IAS 12 is that entities are likely to recognize and report a higher incidence of deferred tax asts on their balance sheet than what we have en under SSAP-12. However, NZ IAS 12 also requires that entities be conrvative in their measurement of the deferred tax ast and they must review the carrying amount at each balance date. If there is a probability that there will no longer be sufficient taxable profits available to allow the benefit of part or the entire deferred tax ast to be utilized, then the carrying amount of the deferred tax ast must be reduced accordingly (paragraph 56 of NZ IAS 12). In addition, the
financial effect of recognizing a deferred tax ast (or for that matter, a deferred tax liability) may be reduced if an entity offts the deferred tax asts and deferred tax liabilities that they prent on the balance sheet (paragraph 74 of NZ IAS 12). Revalued asts
An interesting issue that aris in NZ IAS 12 concerns the revaluation of asts. In this situation, wh
英文儿歌下载en an ast is revalued upwards in the financial statements, but there is no similar adjustment to the tax ba of the ast, this creates a taxable temporary difference that requires the recognition of a deferred tax liability. In comparison, no deferred tax liability would be recognized in the balance sheet for an ast that is revalued under the income statement approach in SSAP-12. Generally, this is becau of the way in which the depreciation charge from the revalued ast is handled in the income statement for accounting and tax purpos. While the depreciation expen for accounting purpos is bad on the revalued amount, depreciation expen that is deducted for tax purpos must still be bad on the ast’s original cost. This means that the depreciation expen that aris from the revaluation increment never has a tax effect (i.e., a timing difference does not ari from that part of the depreciation expen related to the revalued ast) under SSAP-12. Hence, the change in requirement in NZ IAS 12 could increa significantly the amount of the deferred tax liability that is recognized on the balance sheet becau entities revalue their asts regularly.
The measurement of the deferred tax liability from the revaluation in NZ IAS 12 depends on the manner in which the carrying amount of the ast is expected to be recovered at balance date (e paragraph 52 of NZ IAS 12, in particular example B) - that is, whether the ast is expected to be recovered through its further u or if the ast is expected to be recovered through its subquent d
stop的过去式isposal. If the carrying amount of the ast is expected to be recovered through its further u, a deferred tax liability would be recognized by calculating the difference between the carrying amount (i.e., the revalued amount) and the tax ba of the ast. If the carrying amount of the ast is expected to be recovered through its subquent disposal, a deferred tax liability would be recognized by determining the difference between the
