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

To read the full Guidance note, register for a free trial of Tolley+™

TAKE A FREE TRIAL

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

Employment Tax

Loans provided to employees

Loans provided to employeesEmployers sometimes provide their employees with loans, sometimes charging interest and often not, either as part of the reward package or to help the individual meet significant expenditure. For example, it is common to provide loans for the purchase of annual travel

14 Jul 2020 12:11 | Produced by Tolley Read more

Owner-Managed Businesses

Relief for employee share schemes

Relief for employee share schemesRemuneration expenses are generally deductible for corporation tax purposes as they are considered to be incurred wholly and exclusively for the purposes of the trade. However, expenses relating to shares are usually classed as capital and are therefore not

14 Jul 2020 13:21 | Produced by Tolley Read more

Corporation Tax

Research and development expenditure credit (RDEC)

Research and development expenditure credit (RDEC)This guidance note provides information on how research and development expenditure credits (RDEC) are calculated and utilised. The Qualifying expenditure for R&D tax relief guidance note provides information on what expenditure qualifies for

14 Jul 2020 13:24 | Produced by Tolley in association with Will Sweeney Read more

��Ӱ��