Deferred tax

Question 1

What is the accounting standard for tax?

Answer 1

IAS 12

Question 2

Is PUP a DT asset or liability?

Answer 2

Asset

Question 3

Is FV adjustment upward on consolidation a DT asset or liability?

Answer 3

Liability

Question 4

Is Development expenditure a DT asset or liability?

Answer 4

Liability

Question 5

Is a provision a DT asset or liability?

Answer 5

Asset

Question 6

Is a shared based payment a DT asset or liability?

Answer 6

Asset

Question 7

Is a lease a DT asset or liability?

Answer 7

Liability

Question 8

Are undistributed profits of a subsidiary a DT asset or liability?

Answer 8

If there is no intention to distribute and you have control, you do nothing.

Otherwise, liability

Question 9

Are tax losses a DT asset or liability?

Answer 9

Asset only if there are future probably taxable profits

Question 10

Why is a tax reconciliation important?

Answer 10

For understanding the tax charge, why it is effective and why the statutory rates are different

Question 11

Will taxable profits differ from IFRS profits?

Answer 11

Yes due to temporary differences

Question 12

Explain differences in overseas tax

Answer 12

Overseas tax rates are higher. The companies operating in those jurisdictions will pay more tax so will increase overall tax rates

Question 13

Why would you not use future tax rates?

Answer 13

There are no guarantees over future tax rates due to uncertainties over the government

Question 14

Explain tax relating to non taxable gains

Answer 14

The reasons for this needs to be explained as this represents income not taxed

Question 15

Explain tax relating to the impairment of brands

Answer 15

It is common for impairment on intangible assets not to be tax deductible and this would increase taxable profits. The reasons need to be explained to investors.

Question 16

Explain other tax adjustments

Answer 16

This should be a category that only includes small amounts in it so an explanation of what other constitutes is needed

Question 17

Explain Future and Current income tax

Answer 17

IAS 12 Income taxes states that tax liabilities and assets should be shown at the rate substantively enacted at year end and deferred tax assets and liabilities shown at the rate when temporary differences are expected to be reversed.

Question 18

if deductible temporary differences exceed taxable temporary differences, what do we have?

Answer 18

DT Liability

Question 19

If taxable temporary differences exceed deductible temporary differences, what do we have?

Answer 19

DT asset

Question 20

What is the acronym for DT liabilities?

Answer 20

^ DFLP

Question 21

What is the acronym for DT Assets?

Answer 21

(Down) PPPT

Question 22

Name the 5 DT liabilities

Answer 22

Upward FV adjustments
Development expenditure
Foreign undistributable profits
Leases
Pensions

Question 23

Name the 4 DT assets

Answer 23

Downward FV adjustments
Provisions
PUP
Payments (share based)
Tax losses