The following Owner-Managed Businesses guidance note by Tolley in association with Malcolm Greenbaum provides comprehensive and up to date tax information covering:
FRS 102 requires deferred tax to be recognised in certain transactions that would not have given rise to deferred tax under old UK generally accepted accounting practice (GAAP) (FRS 19 ), and it has changed the parameters within other transactions that potentially give rise to deferred taxation (see the Income or expenses of subsidiaries, branches, joint ventures and associates section below).
Under FRS 102, gains and losses on revaluation are recognised in the statement of other comprehensive income, which is outside of the income statement.
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.
FRS 102 permits two accounting treatments for an investment property as follows:
FRS 102, s 16.7 (subscription
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