As a new accounting graduate, you have just joined the financial reporting unit of a listed company* when your manager, the Chief Financial Officer (CFO), approaches you with your first task.
In their last meeting, the board members of your company is concerned about the company's reputational standing in the market relating to the quality of financial information in the annual report, specifically in the area of Income Taxes.
Therefore, the Board decided to have a review of the relevant disclosures in the company's latest annual report pertaining to Income Taxes and whether these disclosures are aligned with the disclosure requirements for Income Taxes as per AASB 112.
Required: Based on the Board's decision, the CFO asks you to draft a business research report addressed to the Board of Directors on the following:
a. Explain in your own words the main principle of tax-effect accounting as outlined in AASB 112) (10 marks).
b. Summarize the disclosure requirements for Income Taxes as per AASB 112 (10 marks).
c. Critically analyse to what extent the latest annual report of your company meets the disclosure requirements for Income Taxes as per AASB 112 (10 marks).
d. Critically discuss the relevance of the disclosures on Income Taxes for investors and potential investors of your company (5 marks).