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taxable temporary differences

Total comprehensive income is defined as ‘the change in equity during a period resulting from transactions and other events, other than those changes resulting from transactions with owners in their capacity as owners’. A change in the tax status of an entity or its shareholders does not give rise to increases or decreases in amounts recognised outside profit or loss. Those tax consequences that relate to changes in the recognised amount of equity, in the same or a different period , shall be charged or credited directly to equity.

  • When an entity pays dividends to its shareholders, it may be required to pay a portion of the dividends to taxation authorities on behalf of shareholders.
  • Because that taxable temporary difference does not relate to the initial recognition of the goodwill, the resulting deferred tax liability is recognised.
  • The major components of tax expense shall be disclosed separately.
  • The criteria for recognising deferred tax assets arising from the carryforward of unused tax losses and tax credits are the same as the criteria for recognising deferred tax assets arising from deductible temporary differences.
  • With no reclassification the earnings per share will never fully include the gains on the sale of PPE and FVTOCI investments.
  • In some other jurisdictions, income taxes may be refundable or payable if part or all of the net profit or retained earnings is paid out as a dividend to shareholders of the entity.

In many cases such scheduling is impracticable or highly complex. Therefore, it is inappropriate to require discounting of deferred tax assets and liabilities. To permit, but not to require, discounting would result in deferred tax assets and liabilities which would not be comparable between entities. Therefore, this Standard does not require or permit the discounting of deferred tax assets and liabilities.


A loan payable has a carrying amount of Rs. 100. The repayment of the loan will have no tax consequences. The tax base of the loan is Rs. 100. A loan receivable has a carrying amount of Rs. 100. Interest receivable has a carrying amount of Rs. 100. The related interest revenue will be taxed on a cash basis.

Acquired deferred tax benefits recognised within the measurement period that result from new information about facts and circumstances that existed at the acquisition date shall be applied to reduce the carrying amount of any goodwill related to that acquisition. Costs of intangible assets have been capitalised in accordance with Ind AS 38 and are being amortised in profit or loss, but were deducted for tax purposes when they were incurred. The arrangement between the parties to a joint venture usually deals with the sharing of the profits and identifies whether decisions on such matters require the consent of all the venturers or a specified majority of the venturers. When the venturer can control the sharing of profits and it is probable that the profits will not be distributed in the foreseeable future, a deferred tax liability is not recognised.

Unrealized Gain/loss on cash hedge

Any deviation in this regard shall be explained. Where the other comprehensive income has revalued its Intangible assets, the company shall disclose as to whether the revaluation is based on valuation by a Registered Valuer as defined under rule 2 of Companies Rules, 2017. Period and amount of default as on the balance sheet date in repayment of borrowings and interest, shall be specified separately in each case. Period and amount of default as on the balance sheet date in repayment of borrowings and interest shall be specified separately in each case.

Thus, in our view, whilst the entity cannot show re-measurement costs as profit and loss, it can transfer the same to accumulated profits / loss or general reserve within the balance sheet. Financial Statements shall contain the corresponding amounts for the immediately preceding reporting period for all items shown in the Financial Statements including Notes except in the case of first Financial Statements after incorporation. Loans due by directors or other officers of the company or any of them either severally or jointly with any other persons or amounts due by firms or private companies respectively in which any director is a partner or a director or a member should be separately stated.

Business Combinations – IFRS 3 (Revised)

Through https://1investing.in/ combinations and other adjustments and the related amortization and impairment losses or reversals shall be disclosed separately. The NBFCs preparing financial statements as per this Schedule may change the order of presentation of line items on the face of financial statements or order of line items within the schedules in order of liquidity, if appropriate, considering the operations performed by the NBFC. Where any Act, Regulation, Guidelines or Circulars issued by the relevant regulators from time to time requires specific disclosures to be made in the standalone financial statements of an NBFC, the said disclosures shall be made in addition to those required under this Schedule. The company shall provide the details of all the immovable properties whose title deeds are not held in the name of the company in following format and where such immovable property is jointly held with others, details are required to be given to the extent of the company’s share. Financial Statements shall disclose all ‘material’ items, i.e., the items if they could.


In explaining the relationship between tax expense and accounting profit, an entity uses an applicable tax rate that provides the most meaningful information to the users of its financial statements. Often, the most meaningful rate is the domestic rate of tax in the country in which the entity is domiciled, aggregating the tax rate applied for national taxes with the rates applied for any local taxes which are computed on a substantially similar level of taxable profit . However, for an entity operating in several jurisdictions, it may be more meaningful to aggregate separate reconciliations prepared using the domestic rate in each individual jurisdiction.

Recycling (the reclassification from equity to P&L)

Where any Act or Regulation requires specific disclosures to be made in the standalone financial statements of a company, the said disclosures shall be made in addition to those required under this Schedule. Total comprehensive income differ to the extend of 38% than Profit after tax. An entry Changes in fair value of equity instruments through OCI adds 19.4 crores to profit after tax of 50.7 crores which is quite substantial.

If the land is subsequently revalued to $12m, then the gain of $2m is recognised in a revaluation reserve and will be taken to OCE. When in a later period the asset is sold for $13m, IAS 16 PPE specifically requires that the profit on disposal recognised in the SOPL is $1m – ie the difference between the sale proceeds of $13m and the carrying amount of $12m. The previously recognised gain of $2m is not recycled/reclassified back to SOPL as part of the gain on disposal.

Not all right says FRED – Financial Times

Not all right says FRED.

Posted: Fri, 10 Mar 2023 08:00:00 GMT [source]

However, economic benefits in the form of reductions in tax payments will flow to the entity only if it earns sufficient taxable profits against which the deductions can be offset. Therefore, an entity recognises deferred tax assets only when it is probable that taxable profits will be available against which the deductible temporary differences can be utilised. The entity recognises a current tax liability and a current income tax expense of Rs. 50,000. No asset is recognised for the amount potentially recoverable as a result of future dividends. The entity also recognises a deferred tax liability and deferred tax expense of Rs. 20,000 (Rs. 40,000 at 50%) representing the income taxes that the entity will pay when it recovers or settles the carrying amounts of its assets and liabilities based on the tax rate applicable to undistributed profits.

Trade receivables have a carrying amount of Rs. 100. The related revenue has already been included in taxable profit . The tax base of the trade receivables is Rs. 100. Ind AS 37 contains requirements on how to measure decommissioning, restoration and similar liabilities. A revaluation surplus on a financial asset classified as FVTOCI is a good example of a bridging gain.

In addition to the disclosure requirements in the Indian Accounting Standards, the aforesaid disclosures shall also be made in respect of ‘other comprehensive income’. Remeasurement of defined benefit plans and fair value changes relating to own credit risk of financial liabilities designated at fair value through profit or loss shall be recognised as a part of retained earnings with separate disclosure of such items alongwith the relevant amounts in the Notes. The aforesaid disclosures for ‘total comprehensive income’ shall also be made in the statement of changes in equity In addition to the disclosure requirements in the Indian Accounting Standards, the aforesaid disclosures shall also be made in respect of ‘other comprehensive Income. Further, ‘total comprehensive income’ for the period attributable to ‘non-controlling interest’ and to ‘owners of the parent’ shall be presented in the statement of profit and loss as allocation for the period. 16If the replacement awards had not been tax-deductible under current tax law, Entity A would not have recognised a deferred tax asset on the acquisition date. Entity A would have accounted for any subsequent events that result in a tax deduction related to the replacement award in the deferred tax income or expense of the period in which the subsequent event occurred.

As a result of a business combination, the probability of realising a pre-acquisition deferred tax asset of the acquirer could change. An acquirer may consider it probable that it will recover its own deferred tax asset that was not recognised before the business combination. For example, the acquirer may be able to utilise the benefit of its unused tax losses against the future taxable profit of the acquiree. Alternatively, as a result of the business combination it might no longer be probable that future taxable profit will allow the deferred tax asset to be recovered. In such cases, the acquirer recognises a change in the deferred tax asset in the period of the business combination, but does not include it as part of the accounting for the business combination. Therefore, the acquirer does not take it into account in measuring the goodwill or bargain purchase gain it recognises in the business combination.

For tax purposes, depreciation of Rs. 30 has already been deducted in the current and prior periods and the remaining cost will be deductible in future periods, either as depreciation or through a deduction on disposal. Revenue generated by using the machine is taxable, any gain on disposal of the machine will be taxable and any loss on disposal will be deductible for tax purposes. The tax base of the machine is Rs. 10.

tax income

The facts are as in example B, except that if the asset is sold for more than cost, the cumulative tax depreciation will be included in taxable income (taxed at 30%) and the sale proceeds will be taxed at 40%, after deducting an inflation-adjusted cost of Rs. 110. It is probable that the temporary difference will not reverse in the foreseeable future. Tax on capital gains is deferred if the proceeds of the disposal of the asset are invested in similar assets.

current tax

Ind AS 1 requires disclosure in the statement of profit and loss of each component of other comprehensive income or expense. In complying with this requirement, the change in the revaluation surplus arising from a change in the liability shall be separately identified and disclosed as such. For instance, plain vanila redeemable preference shares shall be classified and presented under ‘liabilities’ as ‘borrowings’ or ‘subordinated liability’ and the disclosure requirements in this regard applicable to such borrowings shall be applicable mutatis mutandis to redeemable preference shares.


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