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Hi Sir,
Hope you are well.
We know that there is an occurence of deferred tax liability when there is a revaluation gain on a ppe asset.
But can I confirm if there is an occurence of deferred tax asset should there be a revaluation loss on a ppe asset?
If there is a deferred tax asset, should the matching principle also be applied, ie the opposing journal entry is posted to a previously recognised revaluation surplus (OCI), unless there is no previous revaluation surplus, in which case the opposing journal entry is posted to income tax expense?
Add to the principle of matching, should the opposing amount be split into two parts, 1) attributed to those loss that will reverse the previously recognised revaluation surplus, 2) the balancing going into income tax expense?Thanks.
Hi,
Yes, we would apply the same principles if there were to be a reduction in the value of the asset and that loss is taken through OCI. We rarely, if ever, see this at this level and this is more likely to be seen in the higher level paper.
Thanks
Thank you sir. So if the revaluation reduction is charged to PL, does that mean the opposing entry in respect to deferred tax asset is also posted to PL?
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