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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › development costs
how do develoment costs capitalised affect the current year’s deferred tax? what about the deferred tax?
Hi,
The development costs will be capitalised under IAS 38 for the accounting treatment but the tax authorities usually allow the costs in full as incurred, hence the tax base is zero. We should then have the carrying value being greater than the tax base, so a deferred tax liability.
Thanks