CERTYNEX IFRS ACADEMY

The regional bank Vauzelle holds bonds at fair value, 2,300,000 at the reporting date, with a tax base of 2,500,000 (cost). Sufficient taxable profit is probable (case data). The tax manager rules out any temporary difference: 'we will hold these securities to maturity, the loss will disappear'. What is the error?

None: with no planned disposal, the unrealised loss has no tax consequence.

The deductible difference of 200,000 exists at the reporting date, whatever the intention to hold.

The error lies in fair value, which should have been replaced by amortised cost.

The difference should have been a taxable difference of 200,000.