IAS 12: Income taxes – NBC Institute

CR – May 2021 – L3 – Q2a(ii) – Impairment of Overseas Building and Deferred Tax

Recommend the accounting treatment for impairment and deferred tax for an overseas building under IAS 36 and IAS 12.

Question

ii) Recommend the accounting treatment of the above transaction to the directors of Gyamfi for the year ended 31 March 2021, including financial statements extracts in accordance with relevant International Financial Reporting Standards.

Answer

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Tags: Deferred Tax, Depreciation, Impairment, Non-current Assets, overseas asset
Level: Level 3

Topic: IAS 12: Income taxes, IAS 36: Impairment of assets
Series: MAY 2021

CR – May 2018 – L3 – Q2e – IAS 12: Income Taxes

Explain how to account for deferred tax arising from revaluation of land.

Question

On 1 October 2016, Abudu Ltd decided to revalue its land for the first time. The land was originally purchased six years ago for GH¢65,000 and was revalued to its current market value of GH¢80,000 on 1 October 2016. The difference between Abudu Ltd’s net assets (including revaluation of land) and the lower tax base at 30 September 2017 was GH¢27,000. The opening deferred tax liability at 1 October 2016 was GH¢2,600, and Abudu Ltd’s tax rate is 25%.

Required:
Explain how to account for the above transaction in the financial statements of Abudu Ltd for the year to 30 September 2017. (5 marks)

Answer

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Tags: Deferred Tax, Financial Statements, IAS 12, Income tax expense, Revaluation
Level: Level 3

Topic: IAS 12: Income taxes
Series: MAY 2018

CR – Mar 2023 – L3 – Q3b – IAS 12

Recommend the correct financial reporting treatment for foreign-currency denominated inventory and related deferred tax.

Question

Sadio Plc imports wheat from Ukraine for wholesale distribution. On 31 October 2022, Sadio purchased goods for €7.2 million cash at an exchange rate of GH¢1 = €0.12. At 31 October 2022, the net realisable value (NRV) of the inventory was estimated at €7.0 million, and the exchange rate at this date was GH¢1 = €0.14. Sadio’s directors recorded the inventory at its purchase cost in the financial statements for the year ended 31 October 2022.

Sadio only receives tax relief for any inventory loss when the related item is sold. The company’s tax rate at 31 October 2022 was 20%, but a revised rate of 25% was introduced on 18 November 2022. Assume that Sadio has sufficient taxable future profit.

Required:
Recommend the correct financial reporting treatment of the above in Sadio’s financial statements for the year ended 31 October 2022.

Answer

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Tags: Foreign Currency, Inventory, Tax, Translation
Level: Level 3

Topic: IAS 12: Income taxes
Series: MAR 2023

CR – Mar 2023 – L3 – Q2b – IAS 12: Income taxes

Discuss the appropriate accounting treatments for Sanda Ltd’s preference shares and deferred tax asset.

Question

Sanda Ltd, a consumer electronics company in Accra, faced a challenging year due to increased competition and COVID-19. Sanda Ltd has a year-end of 31 December 2021. The unaudited financial statements reported an operating loss, and debt covenant limits were close to being breached. The following occurred during the year:

i. On 1 January 2021, the Finance Director and CEO paid GH¢3 million each for preference shares that provide cumulative dividends of 7% per annum. These preference shares can either be converted into a fixed number of ordinary shares in three years or redeemed at par. The Finance Director suggested classifying the preference shares as equity.

ii. Sanda Ltd included a deferred tax asset in the statement of financial position based on losses incurred in the previous two years. The Finance Director asked the Accountant to include the deferred tax asset in full, expecting a return to profitability once funding issues are resolved.

Required:
With reference to International Financial Reporting Standards (IFRS), discuss the appropriate accounting treatments which Sanda Ltd should adopt for the issues identified in i) and ii) and their impact on gearing as at 31 December 2021.

Answer

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Tags: Convertible Instruments, Deferred Tax, Equity, IAS 12, IAS 32
Level: Level 3

Topic: IAS 12: Income taxes
Series: MAR 2023

CR – May 2021 – L3 – Q2a(ii) – Impairment of Overseas Building and Deferred Tax

Recommend the accounting treatment for impairment and deferred tax for an overseas building under IAS 36 and IAS 12.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Deferred Tax, Depreciation, Impairment, Non-current Assets, overseas asset
Level: Level 3

Topic: IAS 12: Income taxes, IAS 36: Impairment of assets
Series: MAY 2021

CR – May 2018 – L3 – Q2e – IAS 12: Income Taxes

Explain how to account for deferred tax arising from revaluation of land.

Question

Required:
Explain how to account for the above transaction in the financial statements of Abudu Ltd for the year to 30 September 2017. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Deferred Tax, Financial Statements, IAS 12, Income tax expense, Revaluation
Level: Level 3

Topic: IAS 12: Income taxes
Series: MAY 2018

CR – Mar 2023 – L3 – Q3b – IAS 12

Recommend the correct financial reporting treatment for foreign-currency denominated inventory and related deferred tax.

Question

Required:
Recommend the correct financial reporting treatment of the above in Sadio’s financial statements for the year ended 31 October 2022.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Foreign Currency, Inventory, Tax, Translation
Level: Level 3

Topic: IAS 12: Income taxes
Series: MAR 2023

CR – Mar 2023 – L3 – Q2b – IAS 12: Income taxes

Discuss the appropriate accounting treatments for Sanda Ltd’s preference shares and deferred tax asset.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Convertible Instruments, Deferred Tax, Equity, IAS 12, IAS 32
Level: Level 3

Topic: IAS 12: Income taxes
Series: MAR 2023

Topic: IAS 12: Income taxes

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CR – May 2021 – L3 – Q2a(ii) – Impairment of Overseas Building and Deferred Tax

Recommend the accounting treatment for impairment and deferred tax for an overseas building under IAS 36 and IAS 12.

CR – May 2018 – L3 – Q2e – IAS 12: Income Taxes

Explain how to account for deferred tax arising from revaluation of land.

CR – Mar 2023 – L3 – Q3b – IAS 12

Recommend the correct financial reporting treatment for foreign-currency denominated inventory and related deferred tax.

CR – Mar 2023 – L3 – Q2b – IAS 12: Income taxes

Discuss the appropriate accounting treatments for Sanda Ltd’s preference shares and deferred tax asset.

CR – May 2021 – L3 – Q2a(ii) – Impairment of Overseas Building and Deferred Tax

Recommend the accounting treatment for impairment and deferred tax for an overseas building under IAS 36 and IAS 12.

CR – May 2018 – L3 – Q2e – IAS 12: Income Taxes

Explain how to account for deferred tax arising from revaluation of land.

CR – Mar 2023 – L3 – Q3b – IAS 12

Recommend the correct financial reporting treatment for foreign-currency denominated inventory and related deferred tax.

CR – Mar 2023 – L3 – Q2b – IAS 12: Income taxes

Discuss the appropriate accounting treatments for Sanda Ltd’s preference shares and deferred tax asset.

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CR – May 2021 – L3 – Q2a(ii) – Impairment of Overseas Building and Deferred Tax

Recommend the accounting treatment for impairment and deferred tax for an overseas building under IAS 36 and IAS 12.

You're reporting an error for "CR – May 2021 – L3 – Q2a(ii) – Impairment of Overseas Building and Deferred Tax"

CR – May 2018 – L3 – Q2e – IAS 12: Income Taxes

Explain how to account for deferred tax arising from revaluation of land.

You're reporting an error for "CR – May 2018 – L3 – Q2e – IAS 12: Income Taxes"

CR – Mar 2023 – L3 – Q3b – IAS 12

Recommend the correct financial reporting treatment for foreign-currency denominated inventory and related deferred tax.

You're reporting an error for "CR – Mar 2023 – L3 – Q3b – IAS 12"

CR – Mar 2023 – L3 – Q2b – IAS 12: Income taxes

Discuss the appropriate accounting treatments for Sanda Ltd’s preference shares and deferred tax asset.

You're reporting an error for "CR – Mar 2023 – L3 – Q2b – IAS 12: Income taxes"

CR – May 2021 – L3 – Q2a(ii) – Impairment of Overseas Building and Deferred Tax

Recommend the accounting treatment for impairment and deferred tax for an overseas building under IAS 36 and IAS 12.

You're reporting an error for "CR – May 2021 – L3 – Q2a(ii) – Impairment of Overseas Building and Deferred Tax"

CR – May 2018 – L3 – Q2e – IAS 12: Income Taxes

Explain how to account for deferred tax arising from revaluation of land.

You're reporting an error for "CR – May 2018 – L3 – Q2e – IAS 12: Income Taxes"

CR – Mar 2023 – L3 – Q3b – IAS 12

Recommend the correct financial reporting treatment for foreign-currency denominated inventory and related deferred tax.

You're reporting an error for "CR – Mar 2023 – L3 – Q3b – IAS 12"

CR – Mar 2023 – L3 – Q2b – IAS 12: Income taxes

Discuss the appropriate accounting treatments for Sanda Ltd’s preference shares and deferred tax asset.

You're reporting an error for "CR – Mar 2023 – L3 – Q2b – IAS 12: Income taxes"

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