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Please help me understand this statement.
“Deferred tax should be recognised on the revaluation of PPE even if any tax due on the gain made on sale of any asset can be deferred by being ‘rolled over’ against the cost of a replacement asset.”
I didn’t understand the roll over part. Does it mean some amount is reduced from cost of investment which would reduce tax relief? (which in turn would imply tax paid on sale proceeds).
Please help me understand this.
Thanking you in advance.
Rajvir Singh Oberai.
For SBR all you need to know is that if an asset is revalued and the gain goes to OCI then the deferred taxon the gain goes to OCI too. The rest of the statement is involved with tax rules and complicates a treatment that isn’t that complicated.