Using the fundamental principle from IAS 12 Income Tax, explain whether a deferred tax asset or a deferred tax liability should be recognised in relation to the following scenarios. 1. Development costs Development costs of $1000 that are recognised as an asset (i.e. capitalised) and will be amortised to the statement of P/L and OCI. The costs were deducted in determining taxable profit when they were incurred (i.e. when the cash was paid). 2. Trade Receivables Carrying amount of trade receivables is $150. The $150 is net of expected doubtful debts of $50.
Using the fundamental principle from IAS 12 Income Tax, explain whether a deferred tax asset or a deferred tax liability should be recognised in relation to the following scenarios. 1. Development costs Development costs of $1000 that are recognised as an asset (i.e. capitalised) and will be amortised to the statement of P/L and OCI. The costs were deducted in determining taxable profit when they were incurred (i.e. when the cash was paid). 2. Trade Receivables Carrying amount of trade receivables is $150. The $150 is net of expected doubtful debts of $50.
Chapter14: Taxes On The Financial Statements
Section: Chapter Questions
Problem 17CE
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Using the fundamental principle from IAS 12 Income Tax, explain whether a
1. Development costs
Development costs of $1000 that are recognised as an asset (i.e. capitalised) and will be amortised to the statement of P/L and OCI. The costs were deducted in determining taxable profit when they were incurred (i.e. when the cash was paid).
2. Trade Receivables
Carrying amount of trade receivables is $150. The $150 is net of expected doubtful debts of $50.
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