CERTYNEX IFRS ACADEMY

Until now, Lormeval measured the deferred tax on a production line under the rules for its use. In December 20X5, the board approves its sale to a competitor, signed in February 20X6; at the reporting date of 31 December 20X5, sale is the expected manner of recovery. Under the legislation in the case, a disposal is taxed at a different rate and on a different base from use. What does Lormeval do at 31 December 20X5?

It keeps the rules for use until the sale is signed.

It measures deferred tax under the disposal rules from the reporting date.

It uses the higher rate of the two manners, out of prudence.

It no longer recognises deferred tax on an asset to be sold.