IAS 12-Income Taxes
The appropriate reporting of income tax expense in the event of timing differences in the recognition of revenue and expense for tax and financial reporting purposes are subject to IAS 12149. This accounting problem is not addressed in the 4th EU Directive, but different national GAAP treatments exist within the European Union which mainly depend on the influence of tax reporting on financial reporting. Traditionally, this influence is strong in Continental European countries, as already discussed, because accounting has been a reporting medium for purposes of the state and national authorities. As a result of the predominant influence of tax legislation, for example in France and Germany, revenue and expense transactions are treated identically for tax and financial reporting purposes. For tax computation, some expense amounts are not deductible, but this does not lead to deferred taxes because these differences are definite and will not be compensated for in future accounting periods. In Anglo-Saxon-oriented GAAP systems, computation of deferred tax has always been subject to accounting statements because tax and financial reporting are generally different.
KeywordsBalance Sheet Date Business Combination Liability Method Valuation Allowance Financial Reporting Purpose
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