3 The directors of Panel, a public limited company, are reviewing the procedures for the calculation of the deferred taxprovision for their company. They are quite surprised at the impact on the provision caused by changes in accountingstandards such as IFRS1 ‘First time adoption of International Financial Reporting Standards’ and IFRS2 ‘Share-basedPayment’. Panel is adopting International Financial Reporting Standards for the first time as at 31 October 2005 andthe directors are unsure how the deferred tax provision will be calculated in its financial statements ended on thatdate including the opening provision at 1 November 2003.Required:(a) (i) Explain how changes in accounting standards are likely to have an impact on the provision for deferredtaxation under IAS12 ‘Income Taxes’. (5 marks)
3 The directors of Panel, a public limited company, are reviewing the procedures for the calculation of the deferred tax
provision for their company. They are quite surprised at the impact on the provision caused by changes in accounting
standards such as IFRS1 ‘First time adoption of International Financial Reporting Standards’ and IFRS2 ‘Share-based
Payment’. Panel is adopting International Financial Reporting Standards for the first time as at 31 October 2005 and
the directors are unsure how the deferred tax provision will be calculated in its financial statements ended on that
date including the opening provision at 1 November 2003.
Required:
(a) (i) Explain how changes in accounting standards are likely to have an impact on the provision for deferred
taxation under IAS12 ‘Income Taxes’. (5 marks)