IAS 12Chapter 4Lesson 2
Deductible temporary differences and deferred tax assets
Step 1 of 9Learning objectives
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A deductible difference signals future tax deductions: a liability deductible only when paid, or an asset whose tax base exceeds its carrying amount. It gives a deferred tax asset, but only to the extent that future taxable profit will allow those deductions to be used, and outside the initial recognition exception. Examples: provisions and employee benefits deductible when paid, assets carried at fair value below their tax base.
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Learning objectives
- Identify deductible temporary differences on the liability side and on the asset side.
- Calculate the gross deferred tax asset on deductible differences.
- Account for a deferred tax asset and its change.
- Explain why a debt instrument at fair value with an unrealised loss creates a deductible difference even if held to maturity.