Heres our F7 & P2 Subject Specialist Tom Clendons EXAM TIPS (Q&A) on Deferred Tax: Q: So what is deferred tax, and how is it accounted for? A: Deferred tax is provided for in full on all year end temporary differences between the carrying value of assets & liabilities and their tax base. Deferred tax is a valuation adjustment accounted for in accordance with the matching concept, so for example where there is a revaluation gain (which as a non-cash gain attracts no current tax liability) the carrying value exceeds the tax base of the asset, meaning there is a taxable temporary difference and hence the need for an extra deferred tax liability and an extra tax expense to be matched with the revaluation gain.
Posted on: Tue, 20 May 2014 08:51:05 +0000
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