IAS 12

Hi Mr. Widberg,

Hope you’re doing well.

I’m revising my concepts again before I attempt the mocks and I want to confirm if the criteria for not recognizing deferred tax is ONLY FOR INITIAL recognition right?

i.e. if subsequently there is any temporary difference at reporting date, deferred tax impact is recorded.

For clarity purposes I’m copy pasting the criteria hereunder:

“IAS 12 Income Taxes states that deferred tax should be provided for on all
taxable temporary differences, unless the deferred tax liability arises from:
– the initial recognition of goodwill, or
– the initial recognition of an asset or liability in a transaction that is not a
business combination and, at the time of the transaction:
– does not affect accounting profit or taxable profit, and
– does not create equal taxable and deductible temporary differences.”

Please let me know if I’m right.