Page 448 - SBR Integrated Workbook STUDENT S18-J19
P. 448
Chapter 25
Example 3
Revaluations
The carrying amount of the PPE is $5 million and its tax base is $2 million. A
deferred tax liability arises for $0.9 million (($5m – $2m) × 30%). There is
already a deferred tax liability brought forward, so deferred tax liabilities need
to be increased by $0.8 million ($0.9m – $0.1m).
The PPE revaluation gain was $2 million ($5m – $3m). This is recorded in
OCI. The deferred tax on this gain of $0.6 million ($2m × 30%) is also
recorded in OCI.
The remaining $0.2 million of the deferred tax charge is recorded in profit or
loss:
Dr OCI $0.6m
Dr Profit or loss $0.2m
Cr Deferred tax liabilities $0.8m
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