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Hello,
Could someone please show me how to determine the tax base of some assets and liabilities such as : receivables, accrued expenses, prepaid expenses, loan payable,… ?
Also explain in plain language the reasons behind these ?
I have read BPP Textbook and IAS 12 but can’t get it
From BPP Textbook and also from IAS 12:
1. “…tax base of an asset is the amount that will be deductible for tax purpose against any taxable economic benefits that will flow to the entity when it recovers the carrying value of that asset.”
2. “Where those economic benefits are not taxable, the tax base of the asset is the same as its carrying amount.”
3. “In the case of liability, the tax base will be its carrying amount, less any amount that will be deducted for tax purposes in relation to the liability in future periods.”
4. “For revenue received in advance, the tax base of the resulting liability is its carrying amount, less any amount of the revenue that will not be taxable in future periods.”
Could you please explain these sentences in the most simple way possible and preferably with numerical examples ?
Thank you. Yes for PPE I already know the logic behind its tax base.
However for other assets and liabilities such as provision, accrued expense, prepaid expense, receivables, loan, how to determine their tax base and what’s the logic about it ? Could you explain it to me ?
And it’s such a great relief to know that it’s just been tested in Sep’16
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