As a result, the total taxable temporary difference relating to the investment property is 80 (20 + 60). The tax base of the building if it is sold is 30 (60 – 30) and there is a taxable temporary difference of 60 (90 – 30). The tax base of the land if it is sold is 40 and there is a taxable temporary difference of 20 (60 – 40). If that presumption is not rebutted, the deferred tax reflects the tax consequences of recovering the carrying amount entirely through sale, even if the entity expects to earn rental income from the property before sale. If the entity expects to recover the carrying amount by using the item, it must generate taxable income of 150, but will only be able to deduct depreciation of 70. If the entity expects to recover the carrying amount by using the item, it must generate taxable income of 150, but will only be able to deduct depreciation of 70.
Accordingly, where exchange differences on deferred foreign tax liabilities or assets are recognised in the statement of comprehensive income, such differences may be classified as deferred tax expense (income) if that presentation is considered to be the most useful to financial statement users. In accordance with IFRS 3, an entity recognises any resulting deferred tax assets (to the extent that they meet the recognition criteria in paragraph 24) or deferred tax liabilities as identifiable assets and liabilities at the acquisition date. The reliable determination of deferred tax assets and liabilities on a discounted basis requires detailed scheduling of the timing of the reversal of each temporary difference.
Exchange differences on deferred foreign tax liabilities or assets
This might include timing the recognition of income or deductions to ensure that there is sufficient taxable income in the periods when the deferred tax assets are expected to reverse. The strategic use of deferred tax assets can improve a company’s bottom line by reducing the amount of cash tax payable in the future, thereby preserving cash flow. If a company consistently reports losses, the value of its deferred tax assets may need to be written down, which can lead to significant impacts on the financial statements. A large deferred tax asset on the balance sheet may suggest that the company expects to make enough profits in the future to utilize these assets, which can be a positive sign for potential investors.
The portion of the asset’s carrying amount that will be recovered under one tax regime; to Under the capital gains tax regime—the entity receives a tax deduction of CU100 when the licence expires (capital gain deduction). An entity acquires an intangible asset with a finite useful life (a licence) as part of a business combination.
Deferred Tax Liability and Cash Flow
A company should give significant attention to the appropriate timing of releasing a valuation allowance. In practice, companies will often record a valuation allowance in a period in which they report a cumulative pretax loss, adjusted for permanent items, based on the previous 12 quarters of activity. “An entity shall use judgment in considering the relative impact of negative and positive evidence. For example, temps on the current screen flow directly to the deferred screen.}
The estimate of probable future taxable profit may include the recovery of some of an entity’s assets for more than their carrying amount if there is sufficient evidence that it is probable that the entity will achieve this. Compares the deductible temporary differences with future taxable profit that excludes tax deductions resulting from the reversal of those deductible temporary differences. The Interpretations Committee received a request for guidance on the recognition and measurement of deferred tax assets when an entity is loss making.