Ias 12

1907 Words Mar 5th, 2013 8 Pages
Income Tax (IAS12)

Income Tax (IAS12)
Is IAS12 too difficult to apply and understand?
International Accounting Standards 12 continues to receive numerous criticisms on applicability and usefulness of numbers in accounting for corporate income taxes. The argument presented is that the standards set by IAS 12 are too hard to apply or even understand. In the plight of these criticisms, two accounting standards boards, UK’s (ASB) and Germany’s (GASB) opted to conduct a proactive project plan aimed at fundamentally reviewing the standards set by IAS 12 prove hard to solve through piecemeal amendment. Their main agenda was to look at critical issues of accounting for corporate income in an attempt to develop a
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Some users also argue against the notion that the principles underlying IAS 12 is flawed” (JORGE, 2008). However, they believe that the principles of IAS 12 are good but face a number of limitations arising from different and complex jurisdictions governing the various taxes in different parts of the world.
“Due to these and other complexities, surrounding the applicability of IAS 12, there is a need to examine in reality the requirements of the principle is hard to apply in financial accounting and reporting” (Gupta, 2005). First, there is a need to examine significant improvements that can be incorporated to allow flexibility in application due to incompatibility with the various jurisdictions. To understand issues surrounding IAS 12, there is a need to understand problems cited as a limitation to its application. It is important to note that users and preparers believe that the requirements in IAS12 are unsatisfactory in certain aspects. In addition, users of financial reports do not find information courtesy of IAS 12 useful. In fact, complexity of taxes within corporations makes it quite difficult to assess its impact and prescribes suitable management strategies. As a result, clear and transparent information that is not adequately provided by IAS 12 prepared financial statements. “The standard seems to concentrate on extensive

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