Question 1 - Part c
In this part of the question, you'll learn how to evaluate whether a deferred tax asset can be recognised for unused losses—a key requirement in Strategic Business Reporting (SBR).
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In this lesson
- 0:00 Deferred tax asset recognition rules
- 1:10 Applying the probable future profit test
- 2:05 Why Hill cannot recognise the asset
- 4:16 Conclusion and marking guidance
About this lesson
You'll discover the critical rule: a deferred tax asset is only recognised when there's probable future profit to relieve the losses against, and you'll see how to apply this rule by analysing the company's financial position, going concern issues, and the reliability of forecasts. Through a worked example, you'll learn to structure your answer by examining three years of consecutive losses, covenant breaches, and the uncertainty of new product launches, then conclude whether recognition is appropriate. This technique directly supports your exam success by teaching you to combine technical knowledge with scenario analysis—a core skill for case study and objective test questions in SBR.
Duration: 5m
Transcript
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