This assignment aims at developing a clear understanding of students on corporate accounting for income tax

issues. Students will develop an understanding on different concepts used in accounting for income taxes.

They will also develop an understanding on how different concepts of accounting for income tax are used by

companies in the practical setting.

Assessment task:

Collect the latest annual report of an ASX listed company for the last 2 financial years. Please read the financial

statements (balance sheet, income statement, cash flow statement) and notes attached to financial

statements on income tax issues very carefully. Please remember some aspects of your firm's treatment of its

tax-can be a very complicated area, particularly for some firms. Based on your understanding of the topic

"accounting for income tax" and based on your reading of the collected annual reports, do the following tasks.

Briefly explain the concepts

accounting profit, taxable profit, temporary difference, taxable temporary

difference, deductible temporary difference, deferred tax assets and deferred tax liability.

i Briefly explain the recognition criteria of deferred tax assets and deferred tax liability.

il What is your firm's tax expense in its latest financial statements?

iv Is this figure the same as the company tax rate times your firm's accounting income? Explain why this is,

or is not, the case for your firm highlighting the reasons for differences.

v identify the deferred tax assets/liabilities that

reasons why they have been recorded.

reported in the balance sheet articulating the possible

vi Is there any current tax assets or income tax payable recorded by your company? Why is the income tax

payable not the same as income tax expense?

vii Is the income tax expense shown in the income statement same as the income tax paid shown in the cash

flow statement? if not, why is the difference?

viil Briefly explain the concepts of temporary difference and permanent difference. Identify any permanent

differences that your company may have.

ix What do you find interesting, confusing surprising or difficult to understand about the treatment of tax

in your firm's financial statements? What new insights, if any, have you gained about how companies

account for income tax as a result of examining your firm's tax expense in its accounts?