- This topic has 3 replies, 2 voices, and was last updated 7 years ago by
.
- Posts
– A change in tax rate announced after the reporting period, but affecting the current tax liability.
1. Could you explain how the statement above is a non- adjusting event?
– At the end of the reporting period, the condition of paying taxes already existed at the end of the reporting period. So, a change in tax rate affecting the current tax liability should be adjusted.2. Please clarify this.
Thanks.
Where’s the quote “A change in tax rate announced after the reporting period, but affecting the current tax liability” from?
Which TWO of the following events which occur after the reporting date of a company but before the financial statements are authorised for issue are classified as adjusting events in accordance with IAS 10 Events after the reporting period?
a.A change in tax rate announced after the reporting date, but affecting the current tax liability
b.The discovery of a fraud which had occurred during the year
c.The determination of the sale proceeds of an item of plant sold before the year end
d.The destruction of a factory by fire-The answer is b and c.
-What’s wrong with option a?Beats me! The ONLY reason I can think of is that the current tax liability was calculated at the rate that was still applicable as at the date of the financial year end, but the subsequent event (change in tax rate that affects last year’s tax computation ) should, in my humble opinion, be treated as a change in accounting estimate
And I’m not aware of any reason why that should not be so
Possibly the expression “but affecting the current tax liability” relates to the tax of the current year but if that’s what was intended it could have been better worded
Sorry!
- The topic ‘IAS 37’ is closed to new replies.