CERTYNEX IFRS ACADEMY

In 20X5, Quercival incurs a tax loss. The law (case data) allows it to carry the loss back to 20X4 (tax refund) or forward; at the reporting date it elects to carry it back, which gives it a right to a refund of a determined amount. The finance director proposes recognising nothing until the authorities agree. Which analysis should be adopted?

Wait for the authorities' agreement: the asset is recognised only once the refund is accepted in writing.

Recognise in 20X5 a current tax asset and current tax income for the expected refund.

Recognise a deferred tax asset in 20X5, as the loss is used against another period.

Disclose the right to the refund in the 20X5 notes without recognising it.