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Questions and Answers
What is the primary basis for deciding which method to adopt regarding uncertainty resolution?
When is an entity required to reassess its judgments and estimates?
What is the effective date for IFRIC 23?
How should the cumulative effect of applying the new requirements be recognized?
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What is allowed regarding the application of IFRIC 23 if an entity can do so without using hindsight?
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What is the effective date for IFRIC 23 for annual periods?
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What does IFRIC 23 require an entity to assume about taxation authorities?
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Which of the following is a critical aspect of determining tax treatments in IFRIC 23?
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What approach should be taken if an entity concludes that a tax treatment is probable to be accepted by authorities?
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What is one of the main issues clarified by IFRIC 23 regarding income taxes?
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According to IFRIC 23, what should an entity do if it assesses that a tax treatment is not probable to be accepted?
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Which of the following topics is NOT addressed by IFRIC 23?
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What is a possible consequence if an entity misjudges the probability of tax treatment acceptance under IFRIC 23?
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Study Notes
IFRIC 23: Uncertainty over Income Tax Treatments
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Clarifies accounting for uncertainties in income taxes under IAS 12. Applies to determining taxable profit/loss, tax bases, unused tax losses/credits, and tax rates.
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Issued June 7, 2017, effective for annual periods beginning on or after January 1, 2019; earlier application permitted.
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Addresses whether tax treatments should be considered collectively or individually. Entities must use judgment; the approach chosen should provide better predictions of uncertainty resolution.
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Assumes tax authorities will examine reported amounts, possessing full knowledge of relevant information.
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Requires assessment of the probability of tax authorities accepting each tax treatment (or group of treatments).
- If probable: Use the treatment in income tax filings.
- If not probable: Use the most likely amount or expected value. The chosen method should again best predict uncertainty resolution.
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Mandates reassessment of judgments and estimates if facts and circumstances change.
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Transition: Cumulative effect of initial application should be recognized in retained earnings (or appropriate equity components) at the start of the first reporting period of application. Comparative information is not adjusted. Full retrospective application is allowed if feasible without hindsight.
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Description
This quiz covers IFRIC 23, which clarifies the accounting for uncertainties related to income tax treatments. It emphasizes the assessment of probabilities regarding tax authority acceptance and the approach to reporting tax treatments. Test your knowledge on the application and implications of this financial reporting standard.
