ACCA Financial Reporting (FR / F7)

CHAPTER 5: IAS 38 INTANGIBLE ASSETS

Example 21.4.1: temporary differences

Co purchase a NCA depnsop.ee .

Acc rule: HC $100, EUL 5 yrs, ERV=nil

T
Tax rule: Capital allowance @ 50% for 2 yrs bop a
: - .

Taxable profit before depreciation for year 1 to 5 = $100

Accounting profit before depreciation for year 1 to 5 = $100

Accounting base (AB)

Year 1 2 3 4 5
NCA
Historical cost 100 100 100 100 100
Acc depn (20 I C 40 ) C60 ) ( 80 ) ( 100)

Ab NBV (AB) 80 60 40 20 ' 0

>

i
Tax base (TB) 1 2 3 4 5
NCA derecognise
Historical cost 100 100 100 100 100
Acc capital allowance C 50 ) l 100) 0 0 0
TB TB 50 0 0 0 0

← f f f f
↳f TTD
arch
Da 30 60 40 20 O

:&
'
DTL (tax rate @ 20%) G → 12 8 4 O
14%4%4
→

Movement in DT
I
'
+6 46
soph ARE
Tp Taxable profit be4 CA 100 100 100 100 100
Cap allowance Coo) Coo )
-
-
-

Taxable profit 50 50 100 100 100

tax rate -
snot . -

tax prov for the year 10 10 20 to 20

Iaa

Year 1 2 3 4 5
Ap Acc pft be4 depn 100 100 100 100 100
depn ( 20 ) ( so) Cw) Cro ) Cro)

PBT So 80 80 So 80

Inc tax exp: ( wt )

Tax prov for crn year Cio ) cloy cm) Cr) CA )
{Zither RETIE
>
"
try
"
Inc/(Dec) in DT rag tee , 4 4 BOB
Profit for the year 64 64 64 64 64
Conclusion:

€① ⑧
For ASSETS ABg
> TB
taxable
TTD
Kab
Create a DTL
f
Dr Inc tax exp (SOPL)
Cr DTL (SOFP) 3 create prov
↳ taxi T .

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