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Deloitte comment letter on IASB ED/2014/3 'Recognition of Deferred Tax Assets for Unrealised Losses'

Published on: 15 Dec 2014

Deloitte Touche Tohmatsu Limited has responded to the International Accounting Standards Board’s (IASB) Exposure Draft ED/2014/3 Recognition of Deferred Tax Assets for Unrealised Losses.

The IASB's proposed amend­ments aim at clar­i­fy­ing the following aspects:

  • Unrealised losses on debt instruments measured at fair value and measured at cost for tax purposes give rise to a deductible temporary difference regardless of whether the debt instrument's holder expects to recover the carrying amount of the debt instrument by sale or by use.
  • The carrying amount of an asset does not limit the estimation of probable future taxable profits.
  • Estimates for future taxable profits exclude tax deductions resulting from the reversal of deductible temporary differences.
  • An entity assesses a deferred tax asset in combination with other deferred tax assets. Where tax law restricts the utilisation of tax losses, an entity would assess a deferred tax asset in combination with other deferred tax assets of the same type.

In general, we agree with the proposed amendments; however, we suggest some enhancements to the wording to better clarify the proposals.

Download the full comment letter below.

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