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CA Final · Financial Reporting · Ind AS 12 Income Taxes

Alfa Ltd, an Indian company applying Ind AS, is preparing its financial statements. The finance head says that tax expense may be presented in a separate income statement, as IAS 12 once allowed. Which statement correctly reflects Ind AS 12 as notified in India?

Under Ind AS 12 as notified in India, tax expense is presented within the statement of profit and loss. The option of a separate income statement has been removed because Ind AS 1 requires components of profit or loss and other comprehensive income to be presented in one statement.

  1. ATax expense is presented as part of the statement of profit and loss, because Ind AS 1 requires components of profit or loss and OCI to be presented there and the separate income statement approach has been removedCorrect
  2. BTax expense may be shown in a separate income statement if the board approves the two-statement approach
  3. CTax expense must be shown only in the notes and not on the face of any statement
  4. DTax expense is shown in the statement of changes in equity unless it relates to operating activities

Explanation

Ind AS 12 removes the requirements on tax expense in a separate income statement. This follows the removal of the two-statement option in Ind AS 1. Hence the separate-statement option is not available to Alfa Ltd.

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