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Nondeductible Expenses Are Added Nontaxable Revenues Are Deducted To
Nondeductible Expenses Are Added Nontaxable Revenues Are Deducted To
-it uses accrual method of Issue regarding differences in income -it uses cash method of
accounting accounting
PAS 12
ACCOUNTING FOR INCOME TAX
NO
Temporary difference
YES Is financial NO
income higher
than taxable
income?
YES Is carrying NO
amount of
liability is
higher than its
tax base?
Accounting Income xx
Add/(Deduct): Permanent Differences
Add: Nondeductible Expenses xx
Deduct: Nontaxable Revenues (xx)
Accounting Income Subject to Tax xx * Tax Rate= ITE
Add/(Deduct): Temporary Differences
Add: Increase in FDA xx * Tax Rate=DTE/DTL
Deduct: Increase in FTA (xx) *Tax Rate=DTB/DTA
Taxable Income x x * Tax Rate=CTE/CTL