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CA Final · Financial Reporting · Ind AS 12 Income Taxes

Zenith Polymers Ltd, an Ind AS reporter, is preparing its financial statements. The management asks which of the following statements about Ind AS 12 is correct in relation to the presentation of tax expense.

Under Ind AS 12, tax expense is presented within the statement of profit and loss. The separate income statement requirement was deleted because Ind AS 1 removed the two-statement approach, so profit or loss and OCI components appear in a single statement.

  1. ATax expense must be shown in a separate income statement, apart from the statement of profit and loss
  2. BTax expense is presented as a component of profit or loss within the statement of profit and loss, because Ind AS 1 does not allow the two-statement approachCorrect
  3. CTax expense is always shown directly in equity
  4. DTax expense is presented only in the notes and not on the face of the statement

Explanation

The requirements in IAS 12 regarding presentation of tax expense in a separate income statement were deleted in Ind AS 12, as Ind AS 1 removed the two-statement option. Components of profit or loss and OCI are presented as part of one statement of profit and loss. The first option reflects the IFRS option that Ind AS has removed.

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