Income Tax Expenses Benefits And Obligations Accounting Essay

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The amount of income tax that is combined with the net income indicated on the companys income statement. This amount will be exceptional than the income taxes actually owing, since some of the revenues and expenses indicated on the tax return will be different from the amounts on the income statement.

Income tax is defined in AASB 112 Para 5, as the income taxes as profit and loss for a period before deducting the taxes. Taxable profit known as profit for taxation was determined for the commonwealth bank accordance with the Australian Income Tax Legislation and the rules embodied in accounting standards. The income tax on the profit or loss of the bank for the period 2011 comprised with the current and the deferred tax. The bank determined the taxable income and accounting treatment of income taxes accordance with AASB 112 income taxes. The income tax was recognized in the income statement and the current tax was payable on the taxable income.

By using the tax rates the income was presented in the balance sheet and adjusted by the tax payable in the respect of the prior year (2009). The deferred tax was provided by the balance sheet liability method showing the difference between the carrying of the amounts of assets and the liability for the year end .the bank had elected the tax consolidation system on July 1, 2002. The report for the income tax expenses was according to AASB 112, that the bank has the current liabilities for income tax payable and the also has the deferred tax liabilities and assets. The tax expenses were determined for the accounting purposes shown in the comprehensive income and calculated after applied accounting standards. The liability income taxes payable was appeared in balance sheet based on, owned by ATO and the liability based on the income tax assessment act. The income tax expenses for the year were not same as the income tax payable resulted differences between deferred tax assets and liabilities in accordance with AASB 112.

The bank provided employee benefits such as annual leave ,long service leave ,loan benefits ,retired benefits, defined superannuation and contribution superannuation accordance with accounting standards. The annual leave paid to the employee was presented in balance sheet as the current outstanding liability and the long service leave which had discounted the present value. The provisions like home loans, helath fund ,retired and current employees fund ,sick leave ,employees incentives ,employees share plans, bonus etc were represented as the banks liabilities. The fair value of the equity was calculated and amortized to the income statement and increased the employees compensation reserves. Cash settled remuneration was introduced as liability and the fair value as expenses. The assets and the liabilities of the defined superannuation plans and the contribution superannuation plans were separated in trustee administered funds and were calculated separately. The discounted rate was yield at balance sheet and directly recorded in retained profits. The superannuation benefits plans were recognized and recorded separately with other assets, bill payable and liabilities. The contribution superannuation due in the accounting period was prepared in the income statement and unpaid contributions were at balance sheet as a liability.

Accrued expenses were recognized as tax deduction and prepaid expense typically assumed as a tax deduction. Revenue received was treated as a liability and typically taxed, entertainment, goodwill and the impairment treated as expenses and not charged for the period end.

Commonwealth Bank and Accounting Standard:

The financial statement of the bank were approved by the board of the directors on aug 11, 2010 for the year ended 2010, June 30. This is a company limited by shares and traded on the ASX. The reports for the year 2010 were prepared according to Australian Accounting standards, AIFRS and Corporations Act 2001. The financial report has been prepared within the AASB 1048, interpretation and Application of standards and the act 2001. Historical cost method was applied to prepare the reports. Comparatives information was used to confirm the changes in the presentation in the year and amounts were rounded as amended ASIC class Order 98/0100 (nearest to millions dollars). For 2010, same policies ware applied including AASB 101- presentation of financial statements, revised September 2007, and AASB 2007-8 & 2007-10, amendments revised to AASB 101. The items of income and expenses were consolidated in income statement; non owner changes in equity consolidated to comprehensive income statement and replaced the statement of the recognized income and expense. The bank followed AASB 3, Business Combinations and as AASB 127, for consolidated and separated Financial statements. The revised standards were applied from 1 July 2009. The transaction costs were expensed unless the cost relates to issuing debt. AASB 2009-2, amendments to AAS used to disclose the financial instruments that were measured at fair value and liquidity risk. The AASB 2008-1 , AASB 2009-6, AASB 123 , AASB 2009-4 ,2008-6 & 2008-5 and AASB 2008-8 were not affected to p[prepared the reports which concludes share based payments and cancellations , borrowing costs , and eligible Hedged items. Commonwealth bank had followed the corporation act 2001.