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CA Final · Financial Reporting · Ind AS 12 Income Taxes

Zenith Polymers Ltd, an Ind AS reporting company, is finalising its financial statements. The finance manager asks how the tax expense for the year should be presented, given that the earlier IAS 12 text allowed a separate income statement. Which statement correctly reflects the Ind AS 12 position?

Tax expense is presented as a component of profit or loss in the single statement of profit and loss. Ind AS 1 removed the two-statement option, so Ind AS 12 deleted the requirements for a separate income statement, and no separate presentation is permitted.

  1. ATax expense may be shown in a separate income statement if the company chooses the two-statement approach
  2. BTax expense is shown as a component of profit or loss within the statement of profit and loss, because Ind AS 1 presents profit or loss and OCI in one statementCorrect
  3. CTax expense is shown only in the notes and not on the face of any statement
  4. DTax expense is shown only in other comprehensive income

Explanation

Ind AS 12 omits the requirements on presenting tax in a separate income statement. This follows from Ind AS 1 removing the two-statement option and requiring profit or loss and OCI components to be presented in the statement of profit and loss. The two-statement option is therefore not available.

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