Discounting Deferred Tax Liability

2989 WordsApr 23, 201312 Pages
FRS 19 Deferred Taxation Summary Full provision for deferred taxation now required Accelerated capital allowances Pension costs Unrealised group profits Interest costs capatilised Unrelieved tax losses Other short term timing differences Not for: ` Re-valued fixed assets Rollover relief availed of Remittance of overseas sub. Recognise DT asset if it is more likely than not to be recovered Where assets continually re-valued to fair value: provide DT Permits discounting Use tax rates enacted or substantively enacted Separately disclose where very material Reconciliation of current tax charge Don 't provide DT where FRS 7 adjustment made Applies to all financial statements FRSSE are exempt Accounting periods ending on or after 23…show more content…
Gain or loss in STRGL - DT in STRGS as well Measurement Average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse bases on tax rates enacted at the B/S date. Use average rate where there is a graduated tax band Discounting Reporting entities are permitted but not required to discount deferred tax assets and liabilities to reflect the time value of money. Discount all or nothing If deferred tax balances are discounted, the discount period(s) should be the number of years between the balance sheet date and the date(s) on which it is estimated that the underlying timing differences will reverse. Assumptions made when estimating the date(s) of reversal should be consistent with those made elsewhere in the financial statements. The scheduling of the reversal(s) should take into account the remaining tax effects of transactions that have already been reflected in the financial statements. However, no account should be taken either of other timing differences expected to arise on future transactions or of future tax losses. Don 't anticipate tax losses in the future when calculating the cash flows to discount. Use post tax yield to maturity of Government bonds with similar maturity dated to asset. Presentation With the exception of deferred tax relating to a defined benefit asset or liability recognised in accordance with FRS

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