- 4 Marks
FR – May 2019 – L2 – Q2c – Financial Reporting Standards and Their Applications
Explanation of how under- and over-provision of taxes is handled under IAS 12.
Question
IAS 12: Income Taxes sets out guidance for dealing with under-provision and over-provision of income taxes by reporting entities.
During the year ended 31 March 2019, Dansoman Ltd finalised and paid its liability for corporate tax on profit for the year ended 31 March 2018 at an amount of GH¢21 million. It had previously made an estimated provision for corporation tax of GH¢25 million in the financial statements for the year ended 31 March 2018. The directors estimate the liability for the year ended 31 March 2019 at GH¢24.5 million.
Required:
Explain the treatment of the above transactions in the financial statements of Dansoman Ltd for the year ended 31 March 2019 in respect of taxation.
Find Related Questions by Tags, levels, etc.
- Tags: IAS 12, Income Tax, Over-provision
- Level: Level 2
- Topic: Financial Reporting Standards and Their Applications
- Series: MAY 2019
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