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Collect the latest annual report of an ASX listed company for the last 2 financial years. Please read the financial statements (balance sheet, income statement, cash flow statement) and notes attached...

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Collect the latest annual report of an ASX listed company for the last 2 financial years. Please read the financial statements (balance sheet, income statement, cash flow statement) and notes attached to financial statements on income tax issues very carefully. Please remember some aspects of your firm’s treatment of its tax – can be a very complicated area, particularly for some firms. Based on your understanding of the topic “accounting for income tax” and based on your reading of the collected annual reports, do the following tasks.

Briefly explain the concepts of temporary difference and permanent difference. Identify any permanent differences that your company may have.

What do you find interesting, confusing, surprising or difficult to understand about the treatment of tax in your firm’s financial statements? What new insights, if any, have you gained about how companies account for income tax as a result of examining your firm’s tax expense in its accounts?

Briefly explain the concepts of accounting profit, taxable profit, temporary difference, taxable temporary difference, deductible temporary difference, deferred tax assets and deferred tax liability.

 

 

 

Answered 135 days After May 10, 2022

Solution

Hari Kiran answered on Sep 22 2022
71 Votes
Sheet1
        Accounting profit is profit or loss before tax expense as per accountng records.
        Taxable profit (or loss) is the profit (or loss) for a period determined by tax laws, upon which income tax are payable (recoverable).
        Temporary differences
        It is the difference of Ca
ying amount of asset or liability as per Balance Sheet and Tax base.
        On temporary difference, the entity recognises either defe
ed tax asset (DTA) or defe
ed tax...
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