Ch 10: IAS 1 Presentation of Financial Statements
1. The Standard
2. Comprehensive Examples
2-1 Q&A Mint Lemonade Limited (ICAP Spring 2020) [R]
Query: Sir provision for doubtful debt ka closing balance ni deffered tax mein le Kar Jana likin question mein sirf for the year provision le Kar gae hain likin previous question mein closing balance le Kar gae hain kindly ye clear Kar dein
Response: It is better to calculate deferred tax on the basis of closing and opening balances of assets and liabilities. However, sometime question data limits that.
In this question, closing and opening balance of provision for doubtful debts can be used for calculation as well. However, for all assets and liabilities such data is not available, therefore, directly deferred tax expense (credit) has been calculated rather than deferred tax liability (or asset).
2-2 Q&A Zee Trading Limited (ICAP Autumn 2014) [R]
Query: Sir 1st adjustment me NRV ka effect taxation me kuen nahi Lia
Ab Jesy Lease liability ka hmny Lia h bcz we know it effects Taxation..So NRV bhi to krti usy kuen nahi Lia ?
Response: The assumption that "tax authorities will allow write down of inventory as an expense) has been used for consistency with ICAP suggested answer. However, in my opinion, alternative treatment (that will affect current and deferred tax both) should also be correct.
2-3 Q&A Shaheen Limited(ICAP Spring 2015) [R]
Query: sir .. I have multiple queries Regarding this question
1st ) Write off liab ki jb subsequent payment ho Gai h Hm NY exp bna Lia h So tax Waly bhi to isy payment k baad exp treat krty so Is ka CT & DT me effect nahi aana chaiye
2nd) NRV to tax me allow hi nahi h So just Goods damaged hn is ki base pr CT me effect kuen Lia h r agr Lena h so D.T me kuen nahi liaa
3) kia is Question ko hm Normal taxation k Baqi questions Jo krty hn us sy kren to C.T ki working nahi kren gy na Bcz Co. Ki given F.S me Taxation 215 ki value given h So CT ki working Nahi kren gy ? ( just Liabilities ki subsequent payment r NRV ka effect le Len gy Taxable profit me r is ka CT me effect just?
Response: 1. Tax law also requires that liabilities due for more than 3 years should be written back and included in income and expense can be claimed if paid subsequently. So here accounting and tax profit will be affected by equal amount.
2. The assumption that "tax authorities will allow write down of inventory as an expense" has been used for consistency with ICAP suggested answer. However, in my opinion, alternative treatment (that will affect current and deferred tax both) should also be correct.
3. The other IAS 12 solution style will take too much time for this question where detailed working of tax is not specifically required. However, if you use that, start by taking corrected accounting profit and then make adjustments as usual (however, NRV and write back adjustment will not be made because accounting and tax treatment is same and no adjustment is required).
Query: Sir in adjustment no 7, MGT is of the view that PFBD need to be increased... from this sentence could we consider that still this matter isn't final and management is thinking about it.
Response: No. Management is of the view implies that it is to be done. Management views are commonly used for estimates unless clearly unreasonable or unrealistic.
2-4 Q&A Hadi Limited (ICAP Spring 2017) [I]
Query: Sir kindly yeh Bata dein ke plant aur machinery ka account jo ha wo wdv base par Bana ha
Response: Correct. W3 in our solution is based on WDV.
3. Objective Based Q&A