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Title: | An analysis on amendments to IAS 12 income taxes: deferred tax related to assets and liabilities arising from a single transaction (lease) | Authors: | Cao Trong Nhan | Keywords: | IAS 12;Income tax;Deferred tax | Issue Date: | 2021 | Publisher: | Vietnamese-German University | Abstract: | The International Accounting Standards Board publishes an exposure draft in July 2019 with a view to provide tentative modifications on IAS 12 about the recognition of deferred taxes. The exposure draft is based on a submission received by the IFRC Interpretation Committee asking about the recognition of deferred taxes from transactions that incur equal and offsetting amounts of temporary differences. A submission raises concerns in the situation that whether entities recognize deferred taxes from such transactions, e.g. leases transactions. This situation results in various conclusions in practice and hence, reduces the comparability between entities financial statements. Therefore, the IASB decides to restrict the scope of the initial recognition exemption in IAS 12 so that the exemption will not preclude the recognition of deferred taxes from such transactions. The primary objective of the amendments is to consolidate the comparability between financial statements and avoid bias from different conclusions in practice. Moreover, after considering the comment letters, the IASB publishes the official version of the amendments to IAS 12 in May 2021. The paper focuses on analyzing the comment letters from the Big Four accounting firms and reviewing the final version of the amendments in order to rely on that to compare with the analysis in the discussion section. Moreover, the author realizes that the capping approach and transitional provision proposed in the amendments contains several shortcomings and possibly runs counter to the objective of the amendments. As a result, the IASB decides to remove the capping approach and does not require entities to adopt the new amendments retrospectively. |
URI(1): | http://epub.vgu.edu.vn/handle/dlibvgu/1221 |
Appears in Collections: | Finance & Accounting (FA) |
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