IAS 12Chapter 4Lesson 1
Taxable temporary differences and deferred tax liabilities
Step 1 of 9Learning objectives
Go deeper+1 deeper insight · +1 point of attention
When the carrying amount of an asset exceeds its tax base, recovering it will bring more taxable income than deductions: the gap is a taxable temporary difference and the tax that will be payable is a deferred tax liability. It is recognised for all such differences, with exceptions (goodwill, initial recognition). Typical sources: accelerated tax depreciation, income taxed when received, development costs deducted immediately, revaluations and fair value without a tax adjustment, exchange differences on non-monetary items.
25 minNot started
Learning objectives
- Identify the situations that create a taxable temporary difference.
- Calculate the taxable difference and the related deferred tax liability.
- Account for the origination and then the reversal of a deferred tax liability.
- Explain why a revaluation with no tax adjustment creates a difference, even with no intention to dispose of the asset.