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CA Final · Financial Reporting · Ind AS 12 Income Taxes

A student comparing Ind AS 12 Income Taxes with IAS 12 notes that paragraphs 51C and 51D of IAS 12 have been deleted in Ind AS 12, and that paragraphs 20 and 51E have been modified. According to the Ind AS compendium, what is the reason for these changes?

The changes arise because Ind AS 40 does not permit the fair value model for investment property. Paragraphs 51C-51D of IAS 12, which deal with deferred tax on fair-valued investment property, are therefore deleted, and paragraphs 20 and 51E are modified in Ind AS 12.

  1. AInd AS 40 does not allow the fair value model, so these paragraphs are not relevantCorrect
  2. BInd AS 12 does not permit deferred tax on revalued assets under any circumstances
  3. CInd AS 103 requires bargain purchase gain to be recognised directly in capital reserve
  4. DThe two-statement approach for presenting profit or loss has been removed from Ind AS 1

Explanation

The comparison with IAS 12 states that, as a consequence of not allowing the fair value model in Ind AS 40, paragraphs 51C-51D are deleted and paragraphs 20 and 51E are modified. The bargain purchase gain point relates to paragraph 68(a), and the two-statement approach relates to deleted requirements on presenting tax in a separate income statement. Both are therefore different changes.

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