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IFRS 2 deals with two types of Share Based payments.
i) Cash Settled : In this case, the liability is increased as a consequence of Expense, at every year end date with respect to market price of the shares at year end.ii) Equity Settled : for this type of share based transactions, equity is credited with respect to the market value at grant date, and is not adjusted even if market price has changed, only the expected vestage is changed to actual vestage at the vesting date.
Market conditions are not accounted for under sharebased transactions.Timing difference computes the direct difference between Taxable profit, and Accounting profit, and provides deferred tax direcltly.
While this lacks the detailed disclosures, there are no clear exposures as to why that difference actually arise.
An alternative and recommended approach is to provide deferred tax to temporary difference, which is calculated from the difference between the Carrying value and Tax base of the Assets and Liabilites, which helps to clearly mention the allowable and disallowed treatments by HMRC and Accounting policies.Proaccountant..
These are two exemptions to the recognition of Deferred tax liability.
i) As a result of Business combination, a Deferred tax liability arises usually due to upward revaluation of Net assets of subsidiaries, which affects directly goodwill. Therefore the Deferred tax should not be recognized.ii) Deferred tax is provided for the temporary differences, because they create difference between Taxable profit, and accouting profit. Where there no such case, DT should not be recognised.
If that initial recognition does neither affect Accounting nor Taxable profit, there doesn’t appear to be that difference due to that transaction.I hope, this helps you to remove your confusions.
Passed 🙂 52 %
Although my paper went too good, but i am content with the ‘Pass’ Status 🙂Lol.. It was really damn easy paper, i had short time left at the end.
Paper didn’t meet any expectations, it merely required to keep on commenting.Calculation of Cost per consultation in 1st question was little technical but i guess i made a good attempt. I’ve almost attempted full paper, looking forward to achieve good. marks.
Thanks Natka, i am amazed how could you remember all the requirements.
