This article was first published in the February 2011 UK issue of Accounting and Business magazine.
An amendment to IAS 12, Income Taxes, will apply for periods beginning on or after 1 January 2012 and reflects an earlier exposure draft. Deferred tax relating to an asset is required to be measured by reference to whether the asset will be recovered through sale or use.
There can however be practical difficulties in assessing whether recovery will be through sale or use, when the asset is measured using the fair value model in IAS 40, Investment Property. The amendment introduces a presumption that recovery of such assets will be through sale unless specific circumstances exist.
Yvonne Lang, director, Smith & Williamson