The amount of income taxes that is due to the government for a period of time is rarely the same as the amount of income tax expense that is reported on the income statement for that same period under IFRS and one of the alternatives under PE GAAP.
Instructions
(a) Explain the objectives of accounting for income taxes in general purpose financial statements.
(b) Explain the basic principles that are applied in accounting for income taxes at the date of the financial statements to meet the objectives discussed in (a).
(c) Explain how the recognition of future tax accounts on the balance sheet is consistent with the conceptual framework, noting the differences between IFRS and PE GAAP.
(d) Using the definition of an asset and a liability (from Chapter 2), discuss why future income tax assets and future tax liabilities as currently measured and reported might not meet this definition.