- This topic has 1 reply, 1 voice, and was last updated 3 years ago by .
Viewing 2 posts - 1 through 2 (of 2 total)
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.
OpenTuition recommends the new interactive BPP books for June 2024 exams, Get your discount code >>
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Pension provisions IFRS | Tax effect
Hi guys,
By linking accounting and rating I came across an interesting fact. Rating agencies like S&P seem to account for a pension deficit (Plan assets < DBO), deducting a “tax effect” by simply multiplying the pension deficit with (1-effective tax rate) when looking at total debt.
My understanding so far was that service costs (current and past) and net interest costs are charged to the P&L directly and thereby reduce the taxable income. In addition, re-measurements of DBO are charged to OCI – tax effect reported but booked in deferred tax assets / liabilities, correct?
So it is unclear to me how one could explain the “tax effect” of a pension deficit that is recognized by S&P?
This should be related to the timing of recognition of taxes in the cash flow statement.
Would highly appreciate your help!
Best,
Jonathan
Anyone?