IAS 12 – deferred tax and revaluations – ACCA Financial Reporting (FR)
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Depreciation and revaluation, I am ok with it. Do we recognise deferred tax for accrual expenses, provisions, prepayments and accrued income? Since, accounting is according accrual basis and tax is according received/ paid basis?
You always end your lectures on a positive note, really encouraging and helpful. Thank you.
I am curious how it would be in 31 Dec 2016.
Let’s say new dep’n amount is (60k) making the CA 740k
And the tax written down value of the asset is 340k.
Could you please write how it would be recorded properly ?
Thank you
There is a mistake in the notes. Clarke bought a property for $500.000 on 1 January 2015 (and not 2013). So Depr. is $ 30.000 cause revaluation is done at the end of the year and, so we have regular Depr. for year 2015.
how would the income tax liability coming from revaluation surplus balance the SOFP since it has now gone to OCI? Would we deduct it from RS?
income tax for revaluation surplus ?
How to get tax base
Given
Very much helpful, many thanks to u dear sir
Hi,
You state that we are in the first year of the assets life, but the asset was bought at the start of 2013 and we are dealing with statements as at the end of 2015 (2 years later). Kindly clarify.
Thanks.
Hi
Please note that i am a student as well.
I know that its too late by now, but it might help some other students with the same issue
To clarify your issue, please see below:
Start of 2013 is the same as 01 Jan 2013. So, to reach end of 2013, i.e, 31 Dec 2013, it will take one year.
Hence Start of 2013 till End of 2013 is 1 years time.
Now End of 2013 till End of 2014 is another one years time.
Apply same logic for End of 2014 till End of 2015. One more year
Therefore Start of 2013 till End of 2015 is 3 years time.
Hope it helps
I don’t think you understood the query. The property was revalued after three years so why would there be depreciation in 2015 when the depreciation would have been backed out in the revaluation entries. Dr PPE with additional gain Dr depreciation Cr Rev reserve.
See where I am coming from?
Actually the depreciation in SPL in 2015 should only be 10k, assuming the annual depreciation was 10(therefore acc. depreciation 30k).
That is what i was thinking, SPL €30000 Depr 2015 must be incorrect.
It doesn’t matter for calculation of deferred tax as tax base and carrying amount is used for its calculation not dep’n amount per year.
However, we should assume that only from 31 Dec 2015 entity started to account for deferred tax.
there is an error in the notes. The notes has the date as 1 January 2013 while the video has the date as 1 January 2015.