CASE STUDY TAX‐EFFECT ACCOUNTING Every year companies in Australia generally expect to have to pay some of their earnings to the Australian government in the form of income tax. However, the amount paid to the government is rarely the amount reported as income tax expense in the statement of profit or loss and other comprehensive income. Required 1. Explain the objectives of accounting for income tax in general purpose financial statements. 2. Explain the basic principles that are applied in accounting for income tax to meet these objectives. 3. List the steps in the annual computation of deferred tax assets and liabilities. CASE STUDY