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Hello Sir,
Regarding this portion of the adjustment:
At 30 Sep 20×8 deferred the tax written down of value PPE was $25,
The income tax applicable to Loudon co is 20%.Is this a revaluation of PPE ,does it affect the value of PPE in SFP or it is just for tax purposes,
Because there are other PPE adjustment which will different figure than this.
This is a part of SEP/DEC 20 sample CBE (I could not copy the question and answer) ,
Thanks,
Hi,
The revaluation is only adjusted in relation to the PPE itself, so a gain through OCI, in the usual fashion.
For tax purposes there is no impact on the tax written down value, so the tax base is not adjusted for the revaluation, but there is now a higher carrying value of the asset given that it has been revalued. This gives rise to a higher deferred tax impact, where the additional deferred tax on the revalued asset will got through OCI to match the gain on revaluation.
Thanks
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