IAS 12 Income Taxes |

Deferred tax assets – Future tax profits

The availability of future taxable profits – a problem in four parts Deferred tax assets – Future tax profits

The best starting point for determining the availability of future taxable profits is a company’s own business planning cycle and resulting forecasts. Using the company’s forecasts to assess the value of assets with potentially significant impact is not a unique exercise for most telecom operators. Given the significant balances of goodwill, other intangible and tangible assets, impairment testing is an important element of their financial reporting process. Deferred tax assets – Future tax profits

Impairment tests generally are based on approved budgets, which result from a robust budgeting process, and often external experts are involved throughout the impairment process. Often, the Read more

Valuing deferred tax assets

Judgment! Judgment! Judgment! Judgment! Judgment! Judgment! Judgment! Judgment! OK?

The telecommunications industry is very dynamic, driven by technological developments and changes in the competitive and regulatory environment. Due to the significant capital expenditure involved in building infrastructure, investment recovery periods tend to be longer than in many other industries. In the past, a number of telecom operators have recorded significant start-up trading losses and losses due to impairment charges on licences or goodwill and other assets resulting from business combinations. Depending on local tax legislation, operators can use these losses to offset future taxable income.

Companies are required to assess the accumulated losses and the recoverability of any related deferred tax assets (DTA) each year. The amounts involved are often Read more

Corporate taxes

Corporate taxesCorporate taxes – also called income taxes, but than for corporates. Here we go…………  Just a reminder …… Two things in life are certain: …… DEATH……. and ……..TAXES

What is it about?

IAS 12 Income taxes prescribes the accounting treatment for income taxes being the accounting for the current and future tax consequences of:

  • the future recovery (settlement) of the carrying amount of assets (liabilities) that are recognised in an entity’s statement of financial position, and Corporate taxes
  • transactions and other events of the current period that are recognised in an entity’s financial report. Corporate taxes

Current tax – Recognition and measurement

IAS 12 requires the recognition of current tax in an entity’s financial statements. Current tax for current and … Read more