PAS 12: INCOME TAXES

The income tax reported in the Statement of Financial Position may be different from the amount of income tax required to be paid to the BIR.

• True

• False

What is the basic source of the Philippine tax law?

• International Internal Revenue Law

• National Internal Revenue Law

• National Income Tax Law

• International Income Tax Law

What are the other terms for Accounting Profit (Loss)?

• Accounting Income

• Financial income

• Progressive income

• Pretax income

Which of the following statements accurately describes an occurrence of a difference between accounting profit and taxable income?

• Revenues and expenses may be recognized in one reporting period for accounting purposes and in another period for tax purposes.

• Assets and liabilities may be recognized in one reporting period for accounting purposes and in another period for tax purposes.

• The tax losses of prior years cannot be used to reduce the taxable income in later years.

• The tax base and carrying amount of assets and/or liabilities is the same.

It is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.

• Taxable Temporary Differences

• Accounting Profit

• Deferred Tax Assets

• Income Tax Expense

Deferred Tax Expense is the difference of the net changes in deferred tax assets and deferred tax liabilities during the period.

• False

• True

It is the amount of income tax payable (recoverable in respect of the taxable profit (tax loss) for a period

• Current Tax Expense

• Temporary Differences

• Income Tax Expense

• Deferred Tax Expense

What are the examples of Permanent Differences?

• Dividend income

• An asset is revalued upward and no equivalent adjustment is made for tax purposes

• Life insurance premium on employees where the entitiy is the irrevocable beneficiary

• Fines, surcharges, and penalties arising from violation of law

• Revenue is recognized in full under financial reporting but is taxable only when collected

Temporary differences are items of income and expense which are included in either accounting profit or taxable profit but will never be included in both.

• True

• False

Taxable Temporary differences arise when

• The carrying amount of a liability is less than its tax base

• Financial income (accounting profit) is less than the taxable income (taxable profit)

• Financial income (accounting profit) is greater than the taxable income (taxable profit)

• The carrying amount of an asset is greater than its tax base