FRS 102 ― specific deferred tax issues

Produced by Tolley in association with

Corporation Tax

Guidance

Voluntary revaluations of property, plant and equipment

Under FRS 102, gains and losses on revaluation of property, plant and equipment are recognised in the statement of other comprehensive income, which is outside of the income statement. These are revaluations of tangible assets which are held for use in the production or supply of goods or services or for administrative purposes (eg the head office of the company).

Deferred tax must be recognised assuming a sale of the property at the reporting date, using the tax rates and allowances that apply to the sale of the asset.

The initial deferred tax asset or liability and any change in the balance in subsequent accounting periods is recognised in ‘other comprehensive income’ to match the valuation adjustment giving rise to it.

See Example 1.

Measurement of investment property after initial recognition

FRS 102 permits two accounting treatments for an investment property as follows:

1)
if fair value can be measured reliably without undue cost or effort, the investment property should not be depreciated.

Continue reading the full document

To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™

TAKE A FREE TRIAL NOW

Malcolm Greenbaum

Director and Principal Trainer at Greenbaum Training and Consultancy Limited

Malcolm is a UK Chartered Accountant and Chartered Tax Advisor winning the John Wood Medal in the November 1995 CIOT sitting for the best paper on business taxation.He was previously Director of Finance and Taxation Programmes at BPP Professional Education and has delivered IFRS, US GAAP, UK Tax and VAT training (at all levels from an introduction to the complexities of IAS 39) to a multitude of organisations world-wide since 1992.Malcolm has particular experience in delivering bespoke training programmes to multi-nationals in the financial services, transport and energy sectors as well as delivering UK tax and VAT update programmes to accounting and law firms.He is passionate about training and his enthusiasm ensures that the participants enjoy the learning experience whilst gaining knowledge through their engagement in the sessions and through encouraging them to ask questions and discuss practical issues they may have.Malcolm also provides consultancy services to companies and accounting firms, including provision of VAT advice, reviewing accounting policy manuals and advising on accounting treatments of various transactions.In his spare time, Malcolm enjoys flying having gained a Private Pilot's Licence in 2014.

Popular Articles

Personal Tax

Income tax losses ― overview

Income tax losses ― overviewIncome tax losses can arise due to a number of reasons, but not all losses can be relieved against total income and some losses can only be set against certain types of component income. The table below is a summary of the main reliefs for income tax losses.Summary of

04 Mar 2021 12:19 | Produced by Tolley Read more

Owner-Managed Businesses

Residential property and capital allowances

Residential property and capital allowancesResidential property ― plant and machinery allowancesOrdinary residential property does not, and never has, qualified for capital allowances. as CAA 2001, s 35 denies plant allowances for expenditure incurred in providing plant or machinery for use in a

14 Jul 2020 17:14 | Produced by Tolley in association with Martin Wilson and Steven Bone Read more

Corporation Tax

Substantial shareholding exemption ― overview

Substantial shareholding exemption ― overviewThe substantial shareholdings exemption (SSE) provides a complete exemption from the liability to corporation tax on the gains generated from qualifying disposals of shares and interests in shares by qualifying companies. No claim is required. Provided

14 Jul 2020 13:44 | Produced by Tolley Read more

��˾��ҹ��