Domain: Accounting
Question:
Deloitte (2024) in their report titled "IFRS in your pocket" provides that the main objective of IAS 12 is to prescribe the accounting treatment for income taxes. Provide the difference between current tax and deferred tax. What is the difference between Deferred Tax Assets (DTA) and Deferred Tax Liabilities (DTL)? Provide the measurement of deferred tax, and the presentation of current and deferred tax. Additionally, the report states that there are interpretations issued by the IFRS IC (known as IFRIC) and the Standing Interpretation Committee of the IASC (known as SIC). As it relates to tax, explain what IFRIC 23 and SIC-25 is about. All the responses provided above should refer to Deloitte's report titled "IFRS in your pocket" (2024).

Expected points in a correct answer:
Identify Deloitte (2024) "IFRS in your pocket" as the authoritative source.
Identify IAS 12 as the standard governing accounting for income taxes.
State that DTAs are recognized only to the extent that future taxable profit is probable.
State that DTLs are recognized for all taxable temporary differences unless a specific exception applies.
State that IAS 12 prescribes accounting for current tax.
State that IAS 12 prescribes accounting for deferred tax.
State that DTAs and DTLs are measured using enacted or substantively enacted tax rates expected at reversal.
State that current tax is measured using enacted or substantively enacted tax rates.
State that taxable temporary differences give rise to deferred tax liabilities (DTLs).
State that deductible temporary differences give rise to deferred tax assets (DTAs).
State that deferred taxes are measured using expected future tax rates.
State that deferred taxes are not discounted.
State that DTAs are recognized only when recovery is probable.
State that DTLs are generally recognized for all taxable temporary differences.
State that IFRIC issues agenda decisions, not new standards.
Identify common sources of Deferred Tax Liabilities (e.g., accelerated tax depreciation, fair value remeasurements).
Clarify that DTAs and DTLs may be offset only when legal right and same tax authority criteria are met.
Clarify that DTAs and DTLs are not discounted to present value.
State that DTAs require reassessment each reporting period for recoverability.
State that effective tax rate reconciliation is required.
State that DTAs and DTLs may be offset only if specific criteria are met.
State that reconciliation is disclosed transparently in the Financial Supplement.
State that investment-related gains/losses are removed from pre-tax income in the reconciliation.
State that changes in DTAs and DTLs generally impact tax expense unless recognized in OCI or equity.
State that DTAs and DTLs are presented as non-current in the statement of financial position.
State that income tax accounting affects bothequity.
State that income tax accounting affects both profit
Identify that IAS 12 interacts with IAS 1 for presentation.
State that SIC interpretations remain applicable unless superseded.
State that SRE is used internally to assess core insurance profitability.
State that reconciliation aligns with IFRS best practices for non-GAAP measures.
State that integration or transaction costs are excluded in reconciliation.
State that assumption updates are excluded in reconciliation.
State that reconciliation aligns with US GAAP best practices for non-GAAP measures.
State that reconciliation methodology is applied consistently period-over-period.
Identify that IAS 12 interacts with IAS 10 for post-reporting-period tax changes.
Identify SIC as predecessor interpretive body to IFRIC.
Define current tax as income taxes payable or recoverable for the period.
Define deferred tax as tax consequences of temporary differences.
Define a temporary difference as the difference between carrying amount and tax base.
Distinguish between taxable and deductible temporary differences.
State that Deferred Tax Assets (DTAs) represent future income tax recoverable from deductible temporary differences.
State that Deferred Tax Liabilities (DTLs) represent future income tax payable from taxable temporary differences.
Explain that deferred tax follows the underlying transaction (P&L, OCI, or equity).
Identify the role of the IFRS Interpretations Committee (IFRIC).
State that deferred tax reflects future tax consequences, not current cash taxes.
State that tax effects follow the underlying transaction.
State that IAS 12 ensures tax effects are recognized consistently with transactions.
State that IAS 12 applies regardless of whether taxes are paid currently.
State that SRE isolates insurance spread performance free from financial market noise.
Explain why deferred tax does not represent a payable today.
State that derivatives are excluded to normalize earnings.
State that reconciliation allows analysts to distinguish operating performance from market-driven results.
State that GAAP earnings are more volatile due to mark-to-market effects.
State that short-term market fluctuations are excluded to normalize earnings.
State that IAS 12 aims to improve comparability across periods.
Explain that unrecognized DTAs may become recognized when profitability expectations change.
State that normalization removes quarter-to-quarter noise unrelated to core spread economics.
State that reconciliation enhances transparency by clearly bridging GAAP to management metrics.
State that reconciliation supports analysis of asset yield management control.
State that reconciliation supports analysis of cost of funds control.
State that reconciliation improves comparability across periods by removing episodic volatility.