ASB targets reporting income tax

The ASB consultation on improving financial reporting of income tax could transform this complex area. Andrew Lennard reviews the options

Tax is a significant expense for most companies. Unfortunately, accounting for it is difficult. The main problem is that the tax effects of transactions do not always fall in the same period in which the transactions are reported in the financial statements. To cope with this, deferred tax is recognised, which is a means of allocating tax effects to the same period as the related transactions.

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