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PROPERTY, PLANT AND EQUIPMENT
PPE and Deferred Tax
• IAS 12 Income Taxes requires the measurement of
deferred tax assets and liabilities to reflect the tax
consequences that will follow from the manner in
which the entity expects to recover the carrying
amount of the item of PPE.
• The majority of depreciable PPE items will be
recovered solely through use. The examples below
illustrate the exceptions, to the above. Assume a
normal tax rate of 28% and a capital gain tax
inclusion rate of 80% for all examples.
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