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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
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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!
..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 assetThe 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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