IAS 12Chapter 8Lesson 1
From the statement of financial position to profit or loss: deferred tax expense
Step 1 of 9Learning objectives
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Tax follows the transaction that gave rise to it. By default, current and deferred tax go to profit or loss, unless they arise from an item recognised in OCI or in equity, or from a business combination. Deferred tax expense is therefore not always equal to the change in balances: the part that goes to OCI, equity or goodwill must be removed. A change in rates, a reassessment of recoverability or a change in the manner of recovery alters the balances without changing the differences: their effect also goes to profit or loss, except for items previously outside profit or loss.
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Learning objectives
- Calculate deferred tax expense for the period from opening and closing balances, excluding amounts in OCI, equity or business combinations.
- Account for deferred tax expense or income in profit or loss.
- Identify changes in deferred tax without changes in temporary differences (rates, recoverability, manner of recovery).