IAS 12Chapter 5Lesson 2
Unused tax losses and tax credits; reassessment at each reporting date
Step 1 of 9Learning objectives
Go deeper+1 deeper insight · +1 point of attention
Tax losses or tax credits carried forward give a deferred tax asset to the extent that future taxable profit will allow them to be used. But the existence of losses is strong evidence that such profit may not be available: with a history of recent losses, the asset is recognised only up to sufficient taxable differences or other convincing evidence. At each reporting date, the entity reduces an asset that is no longer recoverable, reverses the reduction if the situation improves and recognises a previously unrecognised asset that has become recoverable; it provides the related disclosures.
30 minNot started
Learning objectives
- Determine the recognisable deferred tax asset on losses carried forward, given taxable differences and carry-forward periods.
- Assess the 'convincing evidence' of an entity with a history of recent losses.
- Reassess recognised and unrecognised assets at each reporting date, and account for reduction and reversal.
- Explain the disclosures on unrecognised losses and on an asset that depends on future profits.