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CMA Intermediate · Financial Accounting · Accounting for Taxes on Income (AS 22)

Which statement about AS 22 and a Micro enterprise (Level IV non-company entity) is correct?

A Micro enterprise (Level IV non-company entity) applies AS 22 for current tax related requirements only. It follows the Standard's recognition, measurement, and presentation and disclosure provisions for current tax, and is not required to apply the deferred tax requirements.

  1. AIt need not apply AS 22 at all
  2. BIt applies AS 22 for current tax requirements only, covering recognition, measurement and presentation and disclosure as specifiedCorrect
  3. CIt applies the full Standard including deferred tax
  4. DIt applies only the disclosure requirements and not recognition

Explanation

AS 22 is applicable to such entities for current tax related requirements only. They apply current tax as defined in the Standard, with recognition as per paragraph 9, measurement as per paragraph 20, and presentation and disclosure as per paragraphs 27-28. Deferred tax is therefore not required, so the full-Standard option is wrong.

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