Page 8 - 22. COMPILER QB - INDAS 34

Quarter III ₹6,00,000
(including Estimated Capital Gains of ₹ 4,00,000)
Quarter IV ₹3,00,000

Tax Rates On Other Income First ₹ 2,50,000 20%
Balance Income 30%
On Capital Gains 12%
Calculate the tax expense for each quarter, assuming that there is no difference between the estimated taxable

income and the estimated accounting income.
SOLUTION

As per Ind AS 34 ―Interim Financial Reporting‖, income tax expense is recognised in each interim period based

on the best estimate of the weighted average annual income tax rate expected for the full financial year.

If different income tax rates apply to different categories of income (such as capital gains or income earned
in particular industries) to the extent practicable, a separate rate is applied to each individual category of
interim period pre-tax income.

Rs.
Estimated annual income exclusive of estimated capital gain

(16,50,000 – 4,00,000) (A) 12,50,000
Tax expense on other income:
20% on Rs. 2,50,000 50,000

30% on remaining Rs. 10,00,000 3,00,000
(B) 3,50,000

Weighted average annual income tax rate 28%
Tax expense to be recognised in each of the quarterly reports:
Rs.

Quarter I - Rs. 3,50,000 x 28% 98,000
Quarter II - Rs. 4,00,000 x 28% 1,12,000

Quarter III - Rs. (6,00,000 - 4,00,000) x 28% 56,000
Rs. 4,00,000 x 12% 48,000 1,04,000
Quarter IV - Rs. 3,00,000 x 28% 84,000
3,98,000

Q8 (July 21 – 6 Marks)

Heavy Limited has a plant with normal capacity to produce 90,000 units of a product per annum and
expected fixed production overhead for the year is Rs. 18,00,000. There are no quarterly / seasonal variations.

Hence, normal expected production of each quarter is uniform. The actual production of the year is 87,000

units. The production details of each quarter are as under:
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