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The seminar begins by introducing the fundamental principles of accounting for future tax consequences in accordance with FRS12. Simple illustrations will be used to explain how to recognise deferred tax assets and liabilities. It uses a step-by-step guidance chart to illustrate the rules in constructing a balance sheet liability computational schedule. You will gain a good understanding of the basic principles as well as working knowledge in the recognition, measurement, presentation and disclosure of deferred taxation.
• An introduction to the development of deferred taxation
- The difference between deferral method and liability method
- The different between income statement liability method and balance sheet liability method
- The difference between timing difference, temporary difference and permanent difference
• Objective of FRS12
- The current tax consequences and future tax consequences
- Tax consequences of transactions and other events
- The meaning of tax effect on future economic benefits and future obligation
• Understanding and determining tax base of assets and liabilities
- Non-current assets: assets that are claiming capital allowance and those that are not
- Current assets: inventory and work-in-progress, receivables, prepayments, cash
- Current liabilities: payables, accruals, deferred income
- Non-current liabilities: loans
• Recognition of deferred tax assets and liabilities
- Determining deductible temporary difference and taxable temporary difference
- Accounting treatment for deferred tax liability and deferred tax asset arising from initial recognition
• Measurement of deferred tax assets and deferred tax liabilities
- Determining tax rate enacted and substantively enacted
- Manner of recovery or settlement of assets and liabilities
• Computation format using spread sheet
- Taxable temporary difference and deferred tax liability
- Deductible temporary difference and deferred tax asset
• Presentation and disclosure
- Presenting deferred tax in statement of comprehensive income and statement of financial position
- Accounting policies and explanatory notes to statement of comprehensive income and statement of financial position
- Presenting deferred tax in profit or loss and other comprehensive income
- Preparing an explanation of the relationship between tax expense (income) and accounting profit
Who should attend
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