CERTYNEX IFRS ACADEMY

Rivelane has recognised a dividend receivable of 120,000; tax law (case data) fully exempts this dividend. The accountant uses a nil tax base and derives a temporary difference of 120,000. What is the error?

None: an asset whose recovery gives no deduction has a nil tax base.

The temporary difference should have been computed on the dividend net of tax.

As the benefits are not taxable, the tax base equals the carrying amount: there is no temporary difference.

The dividend receivable should have been excluded from the statement of financial position until collected.