IAS - 12
International Accounting Standard No 12 (IAS 12)
In October 1996, the council approved the revised Standard, published as IAS 12 (revised 1996), income taxes and repealed the previous IAS 12 (reformatted 1994), accounting for taxes on income. The revised standard was effective for financial statements beginning from January 1 1998.
In May 1999, IAS 10 (revised 1999), events after the balance sheet date, amended paragraph 88. The amended text is effective for annual financial statements covering periods beginning on or after January 1, 2000.
In April 2000, were amended paragraphs 20, 62 (a), 64 and Appendix A, paragraphs A10, A11 and B8 to update cross-references and terminology as a result of the issuance of IAS 40, investment property.
In October 2000, the Council approved certain amendments to IAS 12, adding paragraphs 52A, 52B, 65A, 81 (i), 82A, 87A, 87B, 87C and 91, while removing paragraphs 3 and 50. These revisions limited specify the accounting treatment of the consequences of dividends in income tax. The revised text is effective for financial statements covering periods beginning on or after January 1, 2001.
Have been issued two interpretations SIC that are relevant to IAS 12: • SIC-21, income taxes - Recovery of Revalued non-depreciable assets, and • SIC-25, income taxes - Changes in the tax status of the Company or its shareholders.
Note: The Appendices cited in the text of the Standard were not included in this release.
The Standard (IAS 12 revised) replaces IAS 12, accounting for income taxes (IAS 12 original). IAS 12 (revised) is effective for fiscal years beginning on or after January 1 1998. The major changes contained in respect of IAS 12 (original) are as follows:
1. The original IAS 12 required the companies to account for deferred taxes using the deferral method or the liabilities, also known as passive method based on the income statement. IAS 12 (revised) prohibits the deferral method and requires the application of another variant of the method of passive, known as passive method based on the balance sheet. The method of liability that is based on the income statement focuses on temporary differences of income and expenditure, while the one based on the balance sheet but also includes those temporary differences arising from the assets and liabilities. The timing differences in income are differences between the profit tax and accounting, which originate in one period and reverse in the other post. Temporary differences in the balance sheet are those between the tax base of an asset or liability and its carrying amount, within the balance sheet. The tax base of an asset or liability is the value attributed to them for tax purposes. All the temporary differences are also temporary differences. Temporary differences also are generated in the following circumstances, which do not give rise to temporary differences, although the original IAS 12 gave them the same treatment to transactions that give rise to temporary differences: (a) subsidiaries, associates or joint ventures that have not distributed all its profits to the parent or the investor; (b) assets which are accounted revaluation, without making a similar adjustment for tax purposes, and (c) the cost of a business combination will be distributed among the identifiable assets acquired and liabilities assumed identifiable, based on their fair values but without an equivalent adjustment for tax purposes. In addition, there are temporary differences that are not temporary differences, for example, those temporary differences that arise when: (a) The non-monetary assets and liabilities of an entity that is valued in its functional currency but the taxable gain or loss (and therefore the tax base of these non-monetary assets and liabilities) is determined in a different currency;
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