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Blog posts from Annual Reporting Posts
EPS Impact of share-based payments Because share-based payments are common and they impact EPS, it is important to understand how IFRS 2 interacts with IAS 33. Accordingly, this narrative starts with an alternative IFRS 2 perspective and discusses the EPS implications of each type of arrangement under IFRS 2. This narrative builds on the basic … Read more
Topics hide Cash Flow Hedges Example of a Cash Flow Hedge Case – Accounting for a Cash Flow Hedge (Setting up the Cash flow hedge reserve) Example of the Accounting for a Cash Flow Hedge of a Forecast Transaction Resulting in the Recognition of a Non-financial Asset Example of the Accounting for a Cash Flow … Read more
Current tax is the amount of income taxes payable (recoverable) in respect of the taxable profit (tax loss) for a period. IFRS terms or definitions come from the Official Journal of the European Union (© European Union, https://eur-lex.europa.eu). Individual jurisdictions around the world may require or permit the use of (locally … Read more
Topics hide Deferred tax and business combinations Deferred tax and consolidated accounts Intangible assets arising on a business combination Whose tax rate should be applied to fair value adjustments arising in a business combination? Can the recognition of deferred tax on intangibles create goodwill which is immediately impaired? Was a fair price paid? Is the … Read more
Topics hide Allocating deferred tax charge or credit Step 1 – Recognition of deferred tax in OCI or equity Examples of items recognised in OCI Case – Purchase of an equity investment Examples of items recognised directly in equity Deferred tax on equity-settled share-based payments Measurement of deferred tax Component in which to recognise deferred … Read more
Topics hide The manner of tax recovery and the blended tax rate Method of recovery of an asset Dual intention assets Methodology for calculating deferred tax on dual intention assets Integrating initial recognition exemptions into the calculation Case – Building – Blended measurement method Case – Asset intention changes – Blended measurement method The manner … Read more
Topics hide Deferred taxes and Share-based payments Calculating the credit to equity Simple case – Tax credit in profit or loss Case – Tax in other comprehensive income / equity and profit or loss Deferred tax on share options not caught by the measurement provisions of IFRS 2 Deferred taxes and Share-based payments This narrative … Read more
Topics hide IAS 12 Income tax definition IAS 12 Income tax definition Accounting for initial temporary differences after day one Case – Non-deductible cost of a building Changes in an asset’s tax base due to a revaluation or indexation Gains and losses relating to an available-for-sale financial asset reclassified to profit or loss Deferred tax … Read more
Topics hide Deferred tax calculations Step 1 – Establish the accounting base and the tax base of the asset or liability Establishing the accounting base of the asset or liability Determine the tax base of the asset or liability Example accounting and tax base/Example calculation deferred tax Step 2 – Establish the difference between accounting … Read more
Topics hide Determine Tax base Tax base of a revalued asset that is not depreciated Items with a tax base but no accounting base Method of recovery of an asset Taxation and Management’s intention Determine Tax base The tax base of an asset or a liability is the amount attributed to that asset or liability … Read more