CERTYNEX IFRS ACADEMY

Ivranne revalued land under IAS 16, giving rise to a taxable difference of 400,000. Under the legislation in the case, operating income is taxed at 28% and gains on land at 15%. The accountant recognised a deferred tax liability of 112,000, on the ground that the land is used in operations. What is the error?

The liability should have been computed on the total revalued amount, not on the difference.

No deferred tax should have been recognised, as the land is not held for sale.

The liability should have been discounted, as a sale is distant.

The rate: the consequences of sale were required, i.e. 60,000.