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an entity has an asset with a carrying amount of euro 2 000 whose recoverable amount 612435

Recognition of an impairment loss creates a deferred tax asset

An entity has an asset with a carrying amount of €2,000 whose recoverable amount is €1300. The tax rate is 30% and the tax base of the asset is €1,500. Impairment losses are not deductible for tax purposes. The effect of the impairment loss is as follows:

Before impairment

Effect of mpairment €

After impairment

Carrying amount

2,000

(700)

1,300

lax base

1,500

1,500

Taxable (deductible) temporary difference

500

(700)

(200)

Deferred tax liability (asset) at 30%

150

(210)

(60)

The entity will recognise the deferred tax asset to the extent that the respective recognition criteria of IAS 12 are met.

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