Is there deferred tax on revaluation?

Deferred Tax follows the treatment of the item to which it is attributable. For example, the tax arising on revaluation of investment property will appear within the Income Statement as this is where the gain/loss on revaluation is to be recognised.

When Should deferred tax asset be Recognised according to IAS 12?

The general principle in IAS 12 is that a deferred tax asset is recognised for unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised.

Is deferred tax asset an asset?

Is a deferred tax asset a financial asset? Yes, a DTA is a financial asset because it represents a tax overpayment that can be redeemed in the future.

Is deferred tax an asset or liability?

A deferred tax asset is an item on the balance sheet that results from the overpayment or the advance payment of taxes. It is the opposite of a deferred tax liability, which represents income taxes owed.

What is deferred tax asset example?

One straightforward example of a deferred tax asset is the carryover of losses. If a business incurs a loss in a financial year, it usually is entitled to use that loss in order to lower its taxable income in the following years. 3 In that sense, the loss is an asset.

Can DTA and DTL be offset?

Both DTA and DTL can be adjusted with each other provided they are legally enforceable by law and there is an intention to settle the asset and liability on a net basis.

What is IAS 12 deferred tax?

IAS 12 defines a deferred tax liability as being the amount of income tax payable in future periods in respect of taxable temporary differences. So, in simple terms, deferred tax is tax that is payable in the future.

What are examples of deferred tax assets?

Examples of deferred tax assets

• Net operating loss: The business incurred a financial loss for that period.
• Tax overpayment: You paid too much in taxes in the previous period.
• Business expenses: When expenses are recognized in one accounting method but not the other.

What gives deferred tax assets rise?

A deferred tax asset can arise when there are differences in tax rules and accounting rules or when there is a carryover of tax losses.

How are deferred tax assets or liabilities calculated?

Income as per Income tax authorities In the given situation, excess tax paid today due to the difference among the income computed as per books of the company and the income computed by the income tax authorities is 12,60,000 – 12,00,000 = 60,000. This amount i.e. 60,000 will be termed as deferred tax asset (DTA).

What is deferred tax (IAS 12)?

Knowledge Base About Deferred Tax (IAS 12) Last updated: 9 July 2021 Deferred income tax is recognised under IAS 12to account for differences between tax base of an asset or a liability and its carrying amount. Deferred income tax and current income tax comprise total tax expense in the income statement. Temporary differences

What is IAS 12 ‘income taxes’?

Preparation of financial statements under International Financial Reporting Standards (IFRSs) requires the application of IAS 12 ‘Income Taxes’ (IAS 12). Income taxes, as defined in IAS 12, include current tax and deferred tax. For many finance executives the concepts underlying deferred tax are not intuitive.

How are deferred tax assets recognised?

Deferred tax assets are recognised for the ‘outside’ temporary differences arising on the above investments only to the extent that it is probable that (IAS 12.44): the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

What is the general principle in IAS 12?

The general principle in IAS 12 is that a deferred tax liability is recog­nised for all taxable temporary dif­fer­ences. There are three ex­cep­tions to the re­quire­ment to recognise a deferred tax liability, as follows: