1. Deferred Taxes

Question 1

Deferred Taxes Basics

Answer 1

• in IAS12
• payable (recoverable) in future periods in respect of taxable temporary differences
• the reason for existence: Different recognition and measurement rules in the commercial accounts and the tax accounts cause differences that impair the fair presentation of the financial position and performance
• temporary differences are the only important ones
• If a transaction results in different amounts of income/expense recognised in the profit or loss for the period (P/L section), the resulting deferred tax is recognised in the profit or loss as well
• If a transaction is recognised in other comprehensive income (OCI section) or directly in equity, the resulting deferred tax is charged or credited in other comprehensive income or directly in equity as well
• Liability method: measurement of deferred taxes with the tax rate that will apply at the time of reversal of the temporary difference (IAS 12.47)
• As future tax rates are uncertain, the current tax rate is used. If a change of tax rates is announced, however, the future tax rate must be applied.

Question 2

Deferred Tax liability

Answer 2

• stands on the right side of the balance sheet
• is a liability
  recognition:
  def. tax expense // def. tax liability
  resolve:
  def. tax liability // def. tax income

Question 3

Deferred Tax Asset

Answer 3

-stands on the left side of the balance sheet
- is an asset

recognition:
def. tax asset // def. tax income
resolve:
def. tax expense // def. tax asset