Essay on Compare And Contrast Of Accounting For Income Tax

1029 Words May 27th, 2016 null Page
3.4 Compare and contrast of accounting for income tax
3.4.1 Disclosure of income tax part in notes to financial statement for each company
AASB 112 para 5 describes the tax base of assets and liabilities is the amount attributed to that asset and liability for tax purpose. According to this standard, we will compare the way of each company applies it and how the companies present it in their notes to financial statements.
1. Cardno Limited presents the detail calculation of income tax by dividing the income tax expense section into three parts:
a. The component of tax expense giving more detailed amount of tax expense and deffered tax expense for current and adjustment amount. However, there is no more explanation about the movements of the deffered tax asset / liabilities so that we can not determine the particular accounts contributing to deffered tax expense.
b. Numerical reconciliation between tax expense and pre-tax profit to calculate income tax benefit/expense. This part elaborates more detailed the increase (decrease) in income tax expense for particular accounts which have different treatment in tax regulations (permanent differences) such as non-deductible expense, effect of tax rates in foreign jurisdiction, allowance for R&D expenditure, impairment of goodwill and sundry items.
c. Amounts recognised directly in equity
2. Evolultion Limited divides income tax expense section into five parts:
a. Income tax expense containing from deffered tax and previously…

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