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qs.12/08—-bluebell

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AAA Exams › qs.12/08—-bluebell

  • This topic has 3 replies, 2 voices, and was last updated 8 years ago by MikeLittle.
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  • November 22, 2016 at 12:20 pm #350619
    adurich
    Member
    • Topics: 127
    • Replies: 120
    • ☆☆☆

    hello

    i have a doubt in understanding the deffered tax provision for revaluation of property ,for the question from dec 2008 named bluebell..

    it says in answer :

    as per ias 12 ,a deffered tax provision should be recognised on the revaluation of property for which debit is charged o equity ..

    why do we have deffered tax consequence for revaluation

    ….

    November 22, 2016 at 12:35 pm #350628
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23327
    • ☆☆☆☆☆

    Because, if that revaluation turns out to be accurate and the entity does eventually sell it for a profit, tax will be payable on that profit!

    November 22, 2016 at 8:43 pm #350753
    adurich
    Member
    • Topics: 127
    • Replies: 120
    • ☆☆☆

    ..yeah quite clear ,

    but it is not neccesary that the entity sells it as soon as it gets revalued upwards ..they still use it ,,,,and tax is only payable when there is profit ..
    also on the same asset revaluation can be downwards ..then what happens to deffered tax asset

    November 22, 2016 at 9:06 pm #350774
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23327
    • ☆☆☆☆☆

    The deferred tax is an amount to carry forward as, typically, a liability

    As the value of the revalued asset changes, so too will the deferred tax requirement change

    But any change in deferred tax works its way through to the current tax account and is reflected in the current tax charge to the Statement of Profit or Loss

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