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Good morning, Sir
Sir, May I know the reasons why an income tax (IAS12) considered to be an accounting estimate (IAS 8)? Is it because the current tax and deferred tax involves a measurement uncertainty? Can I have a clarification on this?
Income tax = measurement uncertainty – because tax legislation is sometimes unclear and subject to interpretation
Deferred tax = less uncertainty – it’s an objective calculation – but I suppose you could argue that changes in future tax rates make measurement uncertainI would hope that your question is too theoretical for what is now a practical exam 🙂 🙂
Thank You, Sir.
Therefore, we could state the current tax as accounting estimate as well as the deferred tax assuming that the tax rate changes in the future.I did not really get what you have mentioned by stating the question as too theoretical which is now practical. May I know whether you have meant that the income tax standard is more tested numerically rather than theoretically?
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