The Committee received a summary of research and outreach on a request about supply chain financing arrangements. The request asked in particular about the presentation and disclosure of liabilities associated with reverse factoring arrangements.
The Committee will continue its discussion at a future meeting.
|The process for publishing an agenda decision might often result in explanatory material that provides new information that was not otherwise available and could not otherwise reasonably have been expected to be obtained. Because of this, an entity might determine that it needs to change an accounting policy as a result of an agenda decision. The Board expects that an entity would be entitled to sufficient time to make that determination and implement any change (for example, an entity may need to obtain new information or adapt its systems to implement a change).
The Committee discussed the following matters and decided not to add them to its standard-setting agenda
The Committee received a request about deferred tax when the recovery of the carrying amount of an asset gives rise to multiple tax consequences. In the fact pattern described in the request:
The request asked how the entity determines the tax base of the asset and, consequently, how it recognises and measures deferred tax.
The fundamental principle in IAS 12
The fundamental principle upon which IAS 12 is based (as stated in paragraph 10 of IAS 12) is that ‘an entity shall, with certain limited exceptions, recognise a deferred tax liability (asset) whenever recovery or settlement of the carrying amount of an asset or liability would make future tax payments larger (smaller) than they would be if such recovery or settlement were to have no tax consequences’.
Applying the fundamental principle to the fact pattern
The recovery of the asset’s carrying amount gives rise to two distinct tax consequences—it results in taxable economic benefits from use and a capital gain deduction that cannot be offset in determining taxable profit. Accordingly, applying the fundamental principle in IAS 12, an entity reflects separately these distinct tax consequences of recovering the asset’s carrying amount.
An entity identifies temporary differences in a manner that reflects these distinct tax consequences by comparing:
In the fact pattern described in the request, the Committee concluded that the entity identifies both:
The entity then applies the requirements in IAS 12 considering the applicable tax law in recognising and measuring deferred tax for the identified temporary differences.
The Committee concluded that the principles and requirements in IAS 12 provide an adequate basis for an entity to recognise and measure deferred tax in the fact pattern described in the request. Consequently, the Committee decided not to add the matter to its standard-setting agenda.
The Committee received an update on the current status of open matters not discussed at its meeting in April 2020.