PAS 12 Income Taxes: Basic Approach

Introduction to PAS 12 and Key Definitions00:00:00

An introduction to PAS 12 regarding the presentation of income tax in financial statements. The video defines accounting income (based on accounting standards) versus taxable income (based on tax laws) and why they typically differ.

Permanent vs. Temporary Differences00:02:18

Explanation of permanent differences (non-taxable revenues/non-deductible expenses like final taxes or fines) and temporary differences, which have future tax consequences leading to deferred tax assets or liabilities.

Carrying Amount vs. Tax Base00:06:00

Details on how to calculate the carrying amount of assets and liabilities under accounting standards versus their tax base. The video provides a cheat sheet for identifying when to recognize a deferred tax liability versus a deferred tax asset.

Formulas and General Rules00:08:16

Breakdown of the formula to calculate current income tax expense, deferred tax expense, and total income tax expense using the Philippine corporate tax rate of 30%.

Practical Problem Solving00:09:30

A step-by-step walkthrough of five accounting problems involving income tax reconciliations, calculating current vs. total tax expenses, and adjusting for permanent and temporary differences.