Skip to content

CA Final · Financial Reporting · Ind AS 12 Income Taxes

Vishwa Components Ltd prepares its financial statements under Ind AS and presents a single statement of profit and loss that includes the components of other comprehensive income. The finance head asks how tax expense should be presented. Which statement is consistent with the Ind AS 12 text, as compared with IAS 12?

Ind AS 12 removes the requirements on presenting tax expense in a separate income statement. Ind AS 1 removed the two-statement option and requires the components of profit or loss and OCI to be presented in one statement of profit and loss, so no separate income statement exists.

  1. ATax expense must be shown in a separate income statement, with a second statement starting from profit
  2. BInd AS 12 has no presentation requirement for tax expense in a separate income statement, because Ind AS 1 requires profit or loss and OCI components in one statement of profit and lossCorrect
  3. CTax expense is presented only in the notes and is excluded from the statement of profit and loss
  4. DTax expense is shown in the statement of changes in equity and not in the statement of profit and loss

Explanation

Ind AS 12 deletes the IAS 12 requirements on presenting tax expense in a separate income statement. This follows from the removal in Ind AS 1 of the two-statement option. Ind AS 1 requires the components of profit or loss and OCI to be presented as part of the statement of profit and loss. The separate-statement option therefore does not apply.

Did you get it right without looking?

One question tells you little. A timed set on Ind AS 12 Income Taxes shows your real accuracy, how long you take and where you lose marks.

Practise Ind AS 12 Income TaxesFree diagnostic mock

More Ind AS 12 Income Taxes questions