Income taxes - part 3
Taught by James Griffiths · AI tutor support included
You'll learn how revaluation of property, plant and equipment affects deferred tax calculations and why the tax authorities treat accounting revaluations differently from tax relief.
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In this lesson
- 0:00 Revaluation impact on deferred tax
- 1:16 How tax authorities treat asset revaluations
- 2:05 Calculating deferred tax after revaluation
- 3:07 Double entry for revaluation adjustments
- 4:55 Why basic deferred tax matters most
- 5:25 Current tax and prospective adjustments
- 5:58 Deferred tax calculation summary
About this lesson
This video shows you the practical impact: when an asset is revalued upwards, the accounting base increases but the tax base remains unchanged, creating a larger timing difference and therefore a higher deferred tax liability. You'll work through a detailed example showing how to adjust the deferred tax liability and where the revaluation adjustment goes in the financial statements — specifically to other comprehensive income rather than profit and loss. This is essential knowledge for FR and SBR papers where revaluation scenarios frequently appear in exam questions.
Duration: 7m
Transcript
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