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Sir basically what are the implications of deferred tax on acquisition or disposal of subsidiary?
The entity to be acquired may have within its accounting records a deferred tax balance – it could be either an asset (unlikely) or a liability but there is no special treatment for this … it’s just another asset or liability that is being acquired along with all the other assets and liabilities
there may be a fair value adjustment to make to this balance but, again, that’s no different than any other fair value adjustment
It may be that the entity to be acquired has not shown any deferred tax balance within its financial records and, on acquisition, it is determined that there should be recorded a deferred tax balance.
This is no different than any other fair value adjustment but, instead of increasing (say) $5 million carrying value of TNCA to $7 million, with an adjustment to a non-existent deferred tax balance will involve increasing the balance from $zero to (say) $2 million
Both those examples involve a fair value adjustment of $2 million
OK now?
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