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CA Final · Financial Reporting · Ind AS 12 Income Taxes

Kaveri Textiles Ltd is moving from IAS 12-based group reporting to Ind AS. Its finance head notes that IAS 12 contains requirements on presenting tax expense in a separate income statement, but Ind AS 12 does not. What explains this difference?

The separate income statement requirements were deleted because Ind AS 1 no longer offers the two-statement approach. Ind AS 1 requires components of profit or loss and other comprehensive income to be presented as part of the statement of profit and loss, so no separate income statement exists.

  1. AInd AS 12 prohibits disclosure of tax expense in the financial statements
  2. BThe requirements were deleted because the option of a two-statement approach was removed from Ind AS 1, which requires components of profit or loss and OCI to be presented in the statement of profit and lossCorrect
  3. CTax expense is required to be shown only in the notes under Ind AS
  4. DSeparate income statements are required for companies with deferred tax but not for others

Explanation

The requirements on presenting tax expense in a separate income statement were deleted as a consequence of removing the two-statement option in Ind AS 1. Ind AS 1 requires components of profit or loss and of other comprehensive income to be presented as part of the statement of profit and loss. The other options misstate the position.

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