Featured Product

    IASB Proposes Amendments to Accounting for Deferred Tax on Leases

    July 17, 2019

    IASB proposed changes to the IFRS Standard for income tax (IAS 12), which clarifies how companies account for deferred tax on leases and decommissioning obligations. The proposed amendments would require an entity to recognize deferred tax on initial recognition of particular transactions to the extent that the transaction gives rise to equal amounts of deferred tax assets and liabilities. The proposed amendments would apply to the transactions for which an entity recognizes both an asset and a liability, such as leases and decommissioning obligations. Comments are requested until November 14, 2019. IASB also published a summary of the proposed changes and the reasons for these changes as explained by Gary Kabureck, who is an IASB member.

    IAS 12 prohibits an entity from recognizing deferred tax arising from the initial recognition of an asset or a liability in particular situations (recognition exemption). IFRS Interpretations Committee received a request asking whether the recognition exemption in IAS 12 applies to a transaction that results in the recognition of both an asset and a liability—in other words, the request asked whether an entity is required to recognize deferred tax for items such as leases and decommissioning obligations. The Committee observed that views differ on whether the recognition exemption applies to temporary differences that might arise from such a transaction. Such different views could reduce comparability between the financial statements of entities with leases or decommissioning obligations.

    Furthermore, the application of IFRS 16 on leases would increase the potential for differences to arise because an entity would recognize an asset and a liability for many more leases applying that Standard than when applying IAS 17 on leases. Consequently, the Committee recommended that IASB amend IAS 12 to narrow the application of the recognition exemption so that it would not apply to such transactions. IASB agreed with the Committee’s recommendation. IASB expects that applying the proposed amendments would not only increase comparability between entities’ financial statements, but would also result in useful information for users of financial statements. The proposed amendments would align the accounting for the tax effects of particular transactions with the general principle in IAS 12 of recognizing deferred tax for all temporary differences.

     

    Comment Due Date: November 14, 2019

    Keywords: International, Accounting, Leases, IFRS 16, Deferred Tax, Recognition Exemption, IASB

    Related Articles
    News

    EU Amends IFRS 9 Rule, Changes Concern Interest Rate Benchmark Reforms

    EU published Regulation 2020/34 regarding the International Accounting Standard (IAS) 39 and International Financial Reporting Standards (IFRS) 7 and 9.

    January 16, 2020 WebPage Regulatory News
    News

    FDIC and OCC Issue Statement on Heightened Cyber Security Risk

    In response to the heightened cyber-security risk facing the financial services industry and other critical business sectors, FDIC and OCC issued an interagency statement on heightened cyber-security risk.

    January 16, 2020 WebPage Regulatory News
    News

    BoE and FCA Outline Next Steps for LIBOR Transition in 2020

    BoE, FCA, and the Working Group on Sterling Risk-Free Reference Rates (RFRWG) have published a set of documents that outline the LIBOR transition priorities and milestones for 2020.

    January 16, 2020 WebPage Regulatory News
    News

    BCRA Updates Regulation on Capital Requirements and Information Regime

    BCRA updated the rules on minimum capital requirements for financial entities and on certain aspects of the information transparency regime for quarterly and annual supervision.

    January 16, 2020 WebPage Regulatory News
    News

    BIS to Expand Central Bank Membership

    BIS is to expand its central bank membership base and to increase collaboration in its work as a forum for international cooperation and as a hub for central banks and other financial authorities.

    January 14, 2020 WebPage Regulatory News
    News

    EIOPA Issues Technical Specifications for Market and Credit Risk Study

    EIOPA published the technical specifications, including instructions, for the market and credit risk modeling comparative study for year-end 2019.

    January 13, 2020 WebPage Regulatory News
    News

    FED Publishes FAQs on Tailoring Rules for Banks

    FED released a letter announcing the publication of an initial set of frequently asked questions (FAQs) in response to questions from institutions.

    January 13, 2020 WebPage Regulatory News
    News

    IA of Hong Kong Publishes Stress Testing Scenarios in Relation to ORSA

    IA of Hong Kong published the prescribed scenarios for stress and scenario testing to be used by the authorized insurers conducting general insurance business.

    January 13, 2020 WebPage Regulatory News
    News

    FDIC Letter on Submission of Call Reports by End of January 2020

    FDIC, in a letter to financial institutions, announced that the Consolidated Reports of Condition and Income (Call Reports) for the December 31, 2019 report date must be submitted to the Central Data Repository of the relevant US agencies by January 30, 2020.

    January 13, 2020 WebPage Regulatory News
    News

    EBA Consults on Calculation of Own Funds Requirements for Market Risk

    EBA is consulting on the draft regulatory technical standards for calculation of the own funds requirements for market risk, under the standardized and internal model approaches of the Fundamental Review of the Trading Book (FRTB) framework.

    January 13, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 4489