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Good Morning,
I have a technical question:
If a company make a loss of say, (£10,000) in the year and the tax rate is 20% and all losses can be carried forward to offset against future profits. Will your SOP&L look like this:
Taxable total profits (£10,000)
Corporation Tax* £2,000
Retained Profit/(Loss) (£8,000)
Note: The tax “expense” would be an income in this scenario (as long as it is probable that there will be income in coming years to match against).
And also if it is probable that there is going to be future profits, your SOFP would have a Tax asset of £2,000
Am I correct in my assumptions?
If you are confident of making profits in future years, your P&L will show:
Loss before tax (10)
Income Tax 0
Deferred Tax 2
PAT 8
AND DT Asset in SFP
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