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Property, plant. and equipment
Goodwill
Intangible assets
Financial assets
Total noncurrent assets
Chapter
9 /
Income Taxes (lAS
/2)
lAS 12 sets ou t many other disclosure requirements.
Case Study 11
Facts
Balan ce Sheet at J anuary
1,
20X4
Local GAAP
-.1llL
7,000
3,000
2,000
6 000
18000
85
Trade and other receivables
Other receivables
Cash and cash equivalents
Total current assets
Total assets
Issued capital
Revaluation reserve
Retained earnings
Total equity
Interest-bearing loans
Trade and other payables
Employee benefits
Current tax liability
Deferred tax liability
Total liabilities
Total equity and liabilities
7,000
1,600
700
9 300
21.3QQ
6,000
1,500
6 130
13
630
8,000
4,000
1,000
70
600
llQ1Q
21.3QQ
Property, plant, and equipment
Trade receivables
Interest-bearing loans
Financial assets
(a) Tax bases of the above assets and liabilities are the same as their carrying amounts except for
Tax base
~
1,400
7,500
8,500
7,000
• The intangible assets are development costs that are allowed for tax purposes when the cost is
incurred. The costs were incurred in 20X2.
• Included in trade and other payables is an accrual for compen sation to be paid to employees.
It
is allowed for taxation when the payment is made and totals $200 million.
(b) During 20X3, a building was revalued. At January I, 20X4, there was $1500 million remaining
in the revaluation reserve in respect of this building.
(c) The following adjustment s to the financial statements will have to be made to comp ly with
IFRS I,
First-Time Adoption of [FRS,
on January I, 20X4 :
• Intangible assets of $400 million do not qualify for recognition under IFRS I.
• The financial assets are all classified as at fair value through profit or loss and their fair value
is $6,500 million, which is to be included in the IFRS accounts.
• A pension liability of $50 million is to be recognized under IFRS I that was not recognized
under local generally accepted accounting principles (GAAP ). The tax base of the liability is
zero.
(d) The entity is likely to be very profitable in the future.
Required
Calculate the deferred tax provision at January I, 20X4, showing the amount of the adjustment required
to the deferred tax provision and any amounts to be charged to revaluation reserve. (Assume a tax rate of
30%.)