income taxes - nelson cpa · 2007-10-07 · • hkas 12 shall be applied in accounting for income...

1

Income Taxes (HKAS 12)8 October 2007

copy 2005-07 Nelson 1

Nelson LamNelson Lam 林智遠林智遠MBA MSc BBA ACA CFA CPA(Aust) CPA(US) FCCA FCPA(Practising) MSCA

IIII HKAS 12 HKAS 12 ndashndash Income TaxesIncome Taxes

Todayrsquos Agenda

II IntroductionIntroduction

A Current TaxesB Deferred Taxes

IIIIII HK(SIC) Interpretation 21 HK(SIC) Interpretation 21 ndashndash Income Tax Income Tax ndashndashRecovery of Revalued NonRecovery of Revalued Non--Depreciable AssetsDepreciable Assets

IVIV Further discussionFurther discussion


2

I Introduction

Objective of HKAS 12Objective of HKAS 12bull The objective of IAS 12 is

to prescribe the accounting treatment for incomendash to prescribe the accounting treatment for income taxes

bull The principal issue in accounting for income taxes is ndash how to account for the current and future tax

consequences ofa) the future recovery (settlement) of the carrying

amount of assets (liabilities) that are


recognised in an entitys balance sheet andb) transactions and other events of the current

period that are recognised in an entitys financial statements

I Introduction

Scope of HKAS 12Scope of HKAS 12bull HKAS 12 shall be applied in accounting for income taxesbull For the purposes of HKAS 12 income taxes includebull For the purposes of HKAS 12 income taxes include

bull all domestic and foreign taxes which are based on taxable profits

bull taxes such as withholding taxes which are payable by a subsidiary associate or joint venture on distributions to the reporting entity

bull HKAS 12 does not deal with the methodsof accounting for


gbull government grants (see HKAS 20) or bull investment tax credits

bull However HKAS 12 does deal with the accounting for bull temporary differences that may arise from

such grants or investment tax credits

3

Incometaxes

I Introduction

taxes

Deferredtaxes

Currenttaxes

Current CurrentDeferred Deferred


TaxLiabilities

TaxAssets

TaxLiabilities

TaxAssets

Tax expense (tax income)bull is the aggregate amount included in the determination of profit or

loss for the period in respect of current tax and deferred tax


Todayrsquos Agenda



4

Incometaxes

A Current Taxes

taxes

Currenttaxes

Current Current


TaxLiabilities

TaxAssets

A Current Taxes

Current Taxesbull is the amount of income taxes payable

(recoverable) in respect of the taxable(recoverable) in respect of the taxable profit (tax loss) for a period

Taxable profit (tax loss)bull is the profit (loss) for a period determined

in accordance with the rules established by the taxation authorities upon which income taxes are payable (recoverable)


income taxes are payable (recoverable)

5

A Current Tax Liabilities or Assets

Current Tax Liabilitiesbull Current tax for current and prior periods shall

to the extent unpaid be recognised as a liabilityp g y

Current Tax Assetsbull If the amount already paid in respect of current and prior periods exceeds

the amount due for those periodsthe excess shall be recognised as an asset

bull The benefit relating to a tax loss that can be carried back to recover current tax of a previous period


shall be recognised as an assetbull When a tax loss is used to recover current tax of a previous period

an entity recognises the benefit as an assetin the period in which the tax loss occurs becausebull it is probable that the benefit will flow to the entity andbull the benefit can be reliably measured

A Current Tax ndash Measurement

bull Current tax liabilities (assets) for the current and prior periodsndash shall be measured at the amount expected to be paid toshall be measured at the amount expected to be paid to

(recovered from) the taxation authorities ndash using the tax rates (and tax laws) that have been enacted

or substantively enacted by the balance sheet date


6

A Current Tax ndash Presentation

bull An entity shall offset current tax assets and current tax liabilities if and only if the entitya) has a legally enforceable right to set off thea) has a legally enforceable right to set off the

recognised amounts andb) intends either

bull to settle on a net basis orbull to realise the asset and settle the liability

simultaneouslybull The tax expense (income) related to profit or

loss from ordinary activities


ndash shall be presented on the face of the income statement

bull Other disclosures (to be discussed with deferred tax)


Todayrsquos Agenda


1 Overview of deferred taxes2 Tax base3 Temporary differences4 Recognition of deferred tax assetsliabilities5 Measurement


6 Recognition of deferred tax chargecredit7 Presentation8 Disclosure

7

Incometaxes

B Deferred Taxes

taxes

Deferredtaxes

Deferred Deferred


TaxLiabilities

TaxAssets

1 Overview of Deferred Taxes

Deferredtaxes - Largely referenced to the temporary

difference between an asset or liabilitys

carrying amount and

HKAS 12 Income taxes adopts

bullbull Balance sheet liability methodBalance sheet liability method

Temporarydifference


its tax base

bullbull Full provision approachFull provision approach- Recognised all differences except for some limited cases

difference

Tax base

8

1 Overview of Deferred TaxesCase

bull Deferred taxationndash is provided in fullndash using the liability methodndash on temporary differences arising

between

Deferredtaxes

Temporarydifference


bull the tax bases of assets and liabilities and

bull their carrying amounts in the accounts

2004 Annual Report HKEX

difference

Tax base

2 Tax BaseTax baseTax base of an asset or liability isbull the amount attributed to that asset or liability for tax purposes

bull HKAS 12 with reference to AASB 1020 Income Taxes of the Australian Accounting Research Foundation provides further guidance on calculating tax base helliphellip


Tax base

9

2 Tax Base

Tax base -= Carrying amo nt

Future taxable +

Future deductible

Assets

amount amount+

amount

Tax base -= Carrying amount

Future deductible

amount+

Future taxable amount

Liabilities

f


Liabilities for revenue received in advance


Revenue that will not be taxable in future periods

2 Tax BaseThe tax base of an asset isbull the amount that will be deductible for tax purposes

against any taxable economic benefits that will flow to an entity when it recovers the carrying amount of the asset bull If those economic benefits will not be taxable the

tax base of the asset is equal to its carrying amount

The tax base of a liability isbull its carrying amount less any amount that will be

deductible for tax purposes in respect of that liability in


deductible for tax purposes in respect of that liability in future periods

In the case of revenue which is received in advance the tax base of the resulting liability isbull its carrying amount less any amount of the revenue

that will not be taxable in future periods

Tax base

10

2 Tax BaseExample

Calculate the tax base of the following items

bull A car with a cost $1000 was acquired in 2006For tax purposes depreciation allowance of


Tax base = $600bull For tax purposes depreciation allowance of

$400 has been already deductedbull The remaining cost can be deductible in future

periodsbull Revenue generated from the machine is

taxable

bull For tax purposes depreciation allowance of $400 has been already deducted

bull The remaining cost can be deductible in future periods

bull Revenue generated from the machine is taxable

T d i bl h i t fT d i bl h i t f T b $1 000

If revaluatedIf revaluated


bull Trade receivables has a carrying amount of $800 after an impairment loss of $200

bull The related revenue has already been included in taxable profits

bull The impairment loss of $200 has not been deducted for the tax purposes




Tax base = $1000(carrying amount $800 + future deductible amount $200)

2 Tax BaseExample


bull Freehold land with a cost of $2 million is revalued to $3 million

bull Freehold land with a cost of $2 million is revalued to $3 millionto $3 million

bull For tax purposes there is no depreciation bull Revenue generated from the use of the freehold

land is taxable bull However any gain on disposal of the land at the

revalued amount will not be taxable

to $3 millionbull For tax purposes there is no depreciation bull Revenue generated from the use of the freehold




Tax base is the originalcost $2 million

Carrying amount $3 million

What is it

11

3 Temporary Difference

Temporary differences are differences betweenbull the carrying amount of an asset or liability in the

balance sheet and

=Temporary difference Tax base-Carrying

amount

bull its tax base


Tax base


Temporary differences may be eithera) taxable temporary differences

Temporary difference

a) taxable temporary differences bull which are temporary differences that will result in

taxable amounts in determining taxable profit (tax loss) of future periods when the carrying amount of the asset or liability is recovered or settled or

b) deductible temporary differencesbull which are temporary differences that will result in

amounts that are deductible in determining taxable profit (tax loss) of future periods when the


taxable profit (tax loss) of future periods when the carrying amount of the asset or liability is recovered or settled

12


Taxable


temporary difference

Deductible temporary difference


difference


Taxable Tax baseTax base-Carrying amount

Carrying amount

Temporary differences



ForAssets

Positive

Negative

amount

eg an assetrsquos carrying amount is higher than its tax base


differenceFor

LiabilitiesPositive

Negative

eg an assetrsquos carrying amount is lower than its tax base

13



Carrying amount


Deferredtemporary difference


ForAssets

Positive

Negative

amount Deferred tax liability

Deferred tax asset


differenceFor

LiabilitiesPositive

NegativeUnused tax losses ampor

credits Balance sheet liability methodBalance sheet liability method


Taxable Deferred

Deferred tax assets or liabilities

Temporary differences Tax ratesx= Tax rates

Deferred tax liabilities aretemporary difference


Deferred tax liability

Deferred tax asset

Deferred tax liabilities are bull the amounts of income taxes payable in

future periods in respect of taxable temporary differences

Deferred tax assets arebull the amounts of income taxes recoverable

in future periods in respect ofa) deductible temporary differences


difference

Unused tax losses ampor


) p yb) the carryforward of unused tax losses

andc) the carryforward of unused tax

credits

14

3 Temporary DifferenceExample

bull Some items have a tax base but are not recognised as assets and liabilities in the balance sheet

bull For example research costs of $1 000For example research costs of $1000ndash are recognised as an expense in determining accounting profit in the period

in which they are incurredndash may not be permitted as a deduction in determining taxable profit (tax loss)

until a later period

bull The difference betweenndash the tax base of the research costs being the amount the taxation authorities


the tax base of the research costs being the amount the taxation authorities will permit as a deduction in future periods (ie $1000) and

ndash the carrying amount of nil is a deductible temporary difference that results in a deferred tax asset


bull Where the tax base of an asset or liability is not immediately apparentndash it is helpful to consider the fundamental principle uponit is helpful to consider the fundamental principle upon

which HKAS 12 is basedbull that an entity shall with certain limited exceptions

recognise a deferred tax liability (asset)ndash whenever recovery or settlement of the

carrying amount of an asset or liability would make future tax payments larger (smaller) than they would beif such recovery or settlement were to have no

Deferredtax liability

Future tax payment larger


ndash if such recovery or settlement were to have no tax consequences

bull HKAS 1252 Example C illustrates circumstances when it may be helpful to consider this fundamental principle for example when the tax base of an asset or liability depends on the expected manner of recovery or settlement

15


bull In consolidated financial statements temporary differences are determined by comparing p gndash the carrying amounts of assets and liabilities

in the consolidated financial statements withndash the appropriate tax base

bull The tax base is determined by reference tondash a consolidated tax return in those

jurisdictions in which such a return is filed orndash in other jurisdictions the tax returns of each


entity in the group

bull Melody Ltd sold goods at a price $6 million to its parent Bonnie and made a profit of $2 million on the transaction

Deferred tax implications


AnswersAnswersTo the group the carrying amount of the inventory excluding unrealised profit is $2 million ($3 million x 46) while the tax base is $3

bull The inventory of these goods recorded in Bonniersquos balance sheet at the year end of 31 May 2007 was $3 million

bull The entities file income tax return individually


unrealised profit is $2 million ($3 million x 46) while the tax base is $3 million (the unrealised profit taxed in the seller Melody)

A deferred tax asset is resulted from a deductible temporary difference (whether to be recognised or not subject to certain limitations under HKAS 12 to be discussed later)

16

3 Temporary Differencebull Bonnie purchased an item of plant for $2000000 on 1 Oct 2006 bull It had an estimated life of eight years and an estimated residual value

of $400000

Example

of $400000 bull The plant is depreciated on a straight-line basis bull The tax authorities do not allow depreciation as a deductible expensebull Instead a tax expense of 40 of the cost of this type of asset can be

claimed against income tax in the year of purchase and 20 per annum (on a reducing balance basis) of its tax base thereafter

bull The rate of income tax can be taken as 25C l l t th d f d t i t f t 30 S 2009


bull Calculate the deferred tax impact for years up to 30 Sep 2009

Answers


Depreciation$1600000

8 years$ 200000

On 1 Oct 2006 Bonnie purchased a plantbull Purchase cost $2000000bull Estimated residual value $400000bull Estimated useful life 8 yearsbull Depreciation basis Straight-line

The tax authority does not allow depreciation as a deductible expense but grants


bull Initial allowance 40 on cost bull Annual allowance 20 pa on tax basebull Income tax rate 25

$ 800000

17


Answers

Example

($rsquo000)Carrying amount Tax base

Addition 2000 2000

Depreciation (200) (800)

2007 year end 1800 1200



Answers

Example



Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 15025


18

Answers




Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 150




2008 year end 1600 960 640 160 10


2009 year end 1400 768 632 158 (2)


Examples of circumstances resulting in taxable temporary differences1 Depreciation of an asset is accelerated

for tax purposes Taxable Deferredp p2 Interest revenue is received in arrears

and is included in accounting profit on a time apportionment basis but is included in taxable profit on a cash basis

3 Development costs have been capitalised and will be amortised to the income statement but were deducted in determining taxable profit in the period in which they were incurred

4 Prepaid expenses have already been deducted on a cash basis in




4 Prepaid expenses have already been deducted on a cash basis in determining the taxable profit of the current or previous periods

5 Financial assets or investment property are carried at fair value which exceeds cost but no equivalent adjustment is made for tax purposes

6 An entity revalues property plant and equipment (under HKAS 16) but no equivalent adjustment is made for tax purposes

19


Examples of circumstances resulting in deductible temporary differences1 Accumulated depreciation of an asset in the financial statements is greater

than the cumulative depreciation allowed up to the balance sheet date for tax p ppurposes

2 The net realisable value of an item of inventory or the recoverable amount of an item of property plant or equipment is less than the previous carrying amount and an entity therefore reduces the carrying amount of the asset but that reduction is ignored for tax purposes until the asset is sold

3 Research costs are recognised as anexpense in determining accountingprofit but are not permitted as a


Deferred tax asset


profit but are not permitted as a deduction in determining taxable profit until a later period

4 Income is deferred in the balance sheet but has already been included in taxable profit in current or prior periods

5 Financial assets or investment property are carried at fair value which is less than cost but no equivalent adjustment is made for tax purposes

difference


Todayrsquos Agenda





20

Taxable Deferred

4 Recognition of Deferred Tax Assets Liabilities

All recognised




Deferred tax asset


Balance sheet liability methodBalance sheet liability methodFull provision approachFull provision approach

difference

Unused tax losses or credits

Taxable

Except for

DeferredA deferred tax liability shall be

Some cases specified in HKAS 12





Deferred tax asset

recognised for all taxable temporary differences

A deferred tax asset shall be recognised for

all deductible temporary differences


Full provision approachFull provision approach

difference


all deductible temporary differencesto the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised

21


Case

2006 Annual Reportbull Deferred tax

ndash is recognised on temporary differences betweenbull the carrying amount of assets and liabilities in the balance sheetbull and the amount attributed to such assets and liabilities for tax purposes

bull Deferred tax liabilitiesndash are generally recognised for all taxable temporary differences and


g y g p yDeferred tax assetsndash are recognised to the extent it is probable that future taxable profits will be

available against which deductible temporary differences can be utilised

Taxable DeferredA deferred tax liability shall be

Except forSome cases specified in HKAS 12





Deferred tax asset


Deferred tax assets are the amounts of income taxes recoverable in future periods in respect of



difference


periods in respect ofa) deductible temporary differencesb) the carry-forward of unused tax

losses andc) the carry-forward of unused tax

credits

22




ndashndash Taxable temporary differencesTaxable temporary differences




Except to the extent that the deferred tax liability arises from a) the initial recognition of goodwill or Goodwill exemption


b) the initial recognition of an asset or liability in a transaction which 1 is not a business combination and2 at the time of the transaction affects neither accounting profit

nor taxable profit (tax loss) Initial recognition exemption


A deferred tax asset shall be i d f

Deductible temporary Deferred


ndashndash Deductible temporary differencesDeductible temporary differences

recognised for all deductible temporary differencesto the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised



tax asset

unless the deferred tax asset arises from the initial recognition of an asset or liability in a


- the initial recognition of an asset or liability in a transaction which 1 is not a business combination and2 at the time of the transaction affects neither accounting profit

nor taxable profit (tax loss)

initial recognition of an asset or liability in a transaction that

Initial recognition exemption

23

Yes

4 Recognition of deferred tax assetsliabilities

Does deferred tax arise from initial recognition of an asset or liability No

4 Recognition of Deferred Tax Assets Liabilities ndash Initial recognition exemption

R i d f d t

No

No

Is the recognition resulted from a business combination

Does it affect either accounting profitloss or taxable profitlossat the time of the transaction

N t i

Yes

Yes




Recognise deferred tax (subject to other exceptions)

Not recognisedeferred tax assetliability

Examples in Hong Kongradic

4 Recognition of Deferred Tax Assets Liabilities ndashndash Initial recognition exemptionInitial recognition exemption

bull Land cost of a propertybull Cost of demolishing of a buildingbull Intangible assets not tax deductible

eg purchase of trademarksbull Prescribed fixed assets

radicradicradic

times




24

4 Recognition of Deferred Tax Assets LiabilitiesCase

Galaxy Entertainment Group Limited(2005 Annual Report)ndash Deferred taxation is provided in full using the liability

method on temporary differences arising between bull the tax bases of assets and liabilities andbull their carrying amounts in the financial statements

ndash However if the deferred tax arises frombull initial recognition of an asset or liability in a transaction bull other than a business combination that at the time of the


transactionbull affects neither accounting nor taxable profit or loss

ndash it is not accounted for

As discussed an entity shall not recognise a deferred tax liability


4 Recognition of Deferred Tax Assets Liabilities ndashndash GoodwillGoodwill

arising froma) the initial recognition of goodwill helliphellip

Business Combination


Goodwill


25

bull The cost of a business combination ndash is allocated by recognising the identifiable assets

acquired and liabilities assumed


qbull at their fair values at the acquisition date

bull Temporary differences arise ndash when the tax bases of the identifiable assets acquired and

liabilities assumedbull are not affected by the business combination orbull are affected differently




bull Goodwill arising in a business combinationndash is measured as the excess of the cost of the combination over the acquirerrsquos

interest in the net fair value of the acquireersquos identifiable assets liabilities


q and contingent liabilities

bull Deferred tax relating to goodwill arising from initial recognition of goodwillndash when taxation authority does not allow any movement in goodwill as a

deductible expense in determining taxable profit (or when a subsidiary disposes of its underlying business) goodwill has a tax base of nilbull any difference between the carrying amount of goodwill and its tax base

f il i t bl t diff


of nil is a taxable temporary difference

Goodwill

HKAS 12 does not permit the recognition of such resulting deferred tax liability because goodwill is measured as a residual and the recognition of the deferred tax liability would increase the carrying amount of goodwill

26

bull HKAS 12 does not permit the recognition of the resulting deferred tax liabilityndash because goodwill is measured as a residual and the recognition of the


because goodwill is measured as a residual and the recognition of the deferred tax liability would increase the carrying amount of goodwill

bull Subsequent reductions in a deferred tax liability that is unrecognisedndash because it arises from the initial recognition of goodwill are also regarded as

arising from the initial recognition of goodwill and are therefore not recognised

bull Deferred tax liabilities for taxable temporary differences relating to goodwill are


ndash however recognised to the extent they do not arise from the initial recognition of goodwill

Goodwill


bull Bonnie Ltd acquired Melody Ltd on 1 January 2007 for $6 million when the fair value of the net assets was $4 million and the tax written down

Deferred tax implications for the Bonnie Group of companiesExamplendashndash GoodwillGoodwill

value of the net assets was $3 million bull According to the local tax laws for Bonnie amortisation of goodwill is not

tax deductible

AnswersAnswersThe Cohort group Carrying Tax

amount baseG d ill $2 illi


$2 illiDeferred


Goodwill $2 million -Net assets $4 million $3 million

$2 million$1 million

bull Provision is made for the temporary differences of net assetsbull But NO provision is made for the temporary difference of goodwillbull As an entity shall not recognise a deferred tax liability arising from

initial recognition of goodwill

tax liability

27

4 Recognition of Deferred Tax Assets Liabilities ndashndash Compound Financial InstrumentsCompound Financial Instruments

bull In accordance with IAS 32 Financial Instruments Disclosure and Presentationbull the issuer of a compound financial instrument (forthe issuer of a compound financial instrument (for

example a convertible bond) classifies the instrumentrsquos bull liability component as a liability andbull equity component as equity EquityEquity

LiabilityLiability


To discuss more later helliphellip

bull A deferred tax asset shall be recognised for the carry-forward ofbull unused tax losses and



Deferred tax asset


Deferred tax asset

4 Recognition of Deferred Tax Assets Liabilities ndashndash Unused tax losses and tax creditsUnused tax losses and tax credits

bull unused tax losses and bull unused tax credits

ndash to the extent that it is probablethat future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised



difference


difference



bull To the extent that it is not probable that taxable profit will be available against which the unused tax losses or unused tax credits can be utilisedndash the deferred tax asset is not recognised


28

Examples criteria in assessing available taxable profitExamples criteria in assessing available taxable profita) whether there are sufficient taxable temporary differences relating to

4 Recognition of Deferred Tax Assets Liabilities ndashndash Unused tax losses and tax creditsUnused tax losses and tax creditsExample

) p y gthe same taxation authority and the same taxable entity

b) whether it is probable to have taxable profits before the unused tax losses or unused tax credits expire

c) Whether the unused tax losses result from identifiable causes which are unlikely to recur and

d) whether tax planning opportunities are available



Melco Development Limited (2005 Annual Report)

Case ndashndash Unused tax losses and tax creditsUnused tax losses and tax credits

bull A deferred tax asset has been recognised helliphellip to the extent thatrealisation of the related tax benefit through future taxable profit is probable

bull A deferred tax asset is recognised on the balance sheet in view thatndash the relevant subsidiary in the investment banking and the financial services

segment has been profit making in recent years


bull No deferred tax asset has been recognised ndash in respect of the remaining tax loss due to the unpredictability of future profit

streams

29

4 Recognition of Deferred Tax Assets Liabilities ndashndash Unrecognised deferred tax assetsUnrecognised deferred tax assets

Periodic Re-assessmentbull At each balance sheet date

ndash an entity re-assesses unrecognised deferred tax assets

bull The entity recognises a previously unrecognised deferred tax asset

ndash to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered



Examples to Indicate Recognition of Previously Unrecognised Deferred Examples to Indicate Recognition of Previously Unrecognised Deferred Tax AssetsTax Assets

Example

Tax AssetsTax Assetsa) An improvement in trading conditions

ndash This may make it more probable that the entity will be able to generate sufficient taxable profit in the future for the deferred tax asset to meet the recognition criteria set out above

b) Another example is when an entity re-assesses deferred tax assets at the date of a business combination or subsequently


30

4 Recognition of Deferred Tax Assets Liabilities ndashndash Subsidiary branch associate JVSubsidiary branch associate JV

bull An entity shall recognise a deferred tax liability for all taxable temporary differences associated with investments in subsidiaries branches andinvestments in subsidiaries branches and associates and interests in joint ventures ndash except to the extent that both of the following

conditions are satisfieda) the parent investor or venturer is able to control

the timing of the reversal of the temporary difference and

b) it is probable that the temporary difference will


not reverse in the foreseeable future


bull An entity shall recognise a deferred tax asset for all deductible temporary differences arising from investments in subsidiaries branches andinvestments in subsidiaries branches and associates and interests in joint ventures ndash to the extent that and only to the extent that it is

probable thata) the temporary difference will reverse in the

foreseeable future andb) taxable profit will be available against which

the temporary difference can be utilised


31

5 MeasurementaTax rate

bull Deferred tax assets and liabilities shall be measured at the tax rates that



Temporary differencesTemporary differences Tax ratesTax ratesx= Tax ratesTax rates

thatbull are expected to apply to the period when the asset is realised or

the liability is settled bull based on tax rates (and tax laws) that have been enacted or

substantively enacted by the balance sheet datebull The measurement of deferred tax liabilities and deferred tax assets

shall reflect the tax consequences that would follow from the manner in which the entity expects at the balance sheet date to recover or


in which the entity expects at the balance sheet date to recover or settle the carrying amount of its assets and liabilities

bull Deferred tax assets and liabilities shall not be discounted

Changes in the applicable tax rateChanges in the applicable tax rateAn entity has an asset with

5 Measurement Deferred tax assets or liabilities



Example

An entity has an asset with - a carrying amount of $100 - a tax base of $60

Tax rate - 20 for the asset were sold- 30 for other income

AnswersAnswersTemporary differenceAnswersAnswersTemporary differenceAnswersTemporary difference $40 ($100 - $60)






Temporary difference $40 ($100 $60)a) If it expects to sell the asset without further use

Deferred tax liability $8 ($40 at 20)b) if it expects to retain the asset and recover its carrying amount

through useDeferred tax liability $12 ($40 at 30)

32

5 Measurement

Th i t f d f d t t h ll b i d t




bDeferred tax assetsaTax rate

bull The carrying amount of a deferred tax asset shall be reviewed at each balance sheet date

bull An entity shall reduce the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised

bull Any such reduction shall be reversed to the extent that it becomes b bl th t ffi i t t bl fit ill b il bl


probable that sufficient taxable profit will be available

5 MeasurementCase




200405 Annual Reportbull The carrying amount of a deferred tax asset

ndash is reviewed at each balance sheet date andndash is reduced to the extent that it is no longer probable that sufficient taxable

profit will be available to allow the related tax benefit to be utilizedbull Any such reduction is reversed to the extent that it becomes probable

that sufficient taxable profit will be available



33



Dr Cr Deferred tax liabilities

Dr Deferred tax assetsCr

bull Current and deferred tax shall be recognised as income or an expense and included in the profit or loss for the period


Dr Deferred tax assetsCr Tax income

Dr Tax expensesCr Deferred tax liabilities

That simple


Todayrsquos Agenda





34

Dr Tax expensesCr Deferred tax liabilitiesDr Tax expenses or EquityDr Tax expenses or Equity or Goodwill

6 Recognition of deferred tax chargecredit

Dr Deferred tax assetsCr Tax incomeCr Tax income or EquityCr Tax income or Equity or Goodwill

except to the extent that the tax arises from


a) a transaction or event which is recognised in the same or


b) a business combination that is an acquisition

a) a transaction or event which is recognised in the same or a different period directly in equity or

Cr Deferred tax liabilitiesDr Tax expenses and Equity

6 Recognition of deferred tax chargecreditndash Charged or credited to equity directly

bull Current tax and deferred tax shall be charged or creditedbull Current tax and deferred tax shall be charged or credited directly to equity if the tax relates to items that are credited or charged in the same or a different period directly to equity

Example

Extract of trial balance at year end HK$rsquo000Deferred tax liabilities (Note) 5200

Note Deferred tax liability is to be increased to $74 million of which


Note Deferred tax liability is to be increased to $74 million of which $1 million is related to the revaluation gain of a property

Answers HK$rsquo000 HK$000

Dr Deferred tax expense ($74 - $52 - $1) 1200Revaluation reserves 1000

Cr Deferred tax liabilities ($74 ndash $52) 2200

35

Dr Tax expenses and EquityCr Deferred tax liabilities

bull Current tax and deferred tax shall be charged or credited


bull Current tax and deferred tax shall be charged or credited directly to equity if the tax relates to items that are credited or charged in the same or a different period directly to equity

Certain HKASs and HKASs require or permit certain items to be credited or charged directly to equity examples include

1 Revaluation difference on property plant and equipment under HKAS 16


HKAS 162 Adjustment resulted from either a change in accounting policy or the

correction of an error under HKAS 83 Exchange differences on translation of a foreign entityrsquos financial

statements under HKAS 214 Available-for-sale financial assets under HKAS 39

Cr Deferred tax liabilitiesDr Tax expenses or Goodwill

6 Recognition of deferred tax chargecreditndash Deferred tax arising from a business combination

Dr Deferred tax assets

bull Temporary differences may arise in a business combinationbull In accordance with HKFRS 3 an entity recognises any resulting

deferred tax assets (to the extent they meet the recognition criteria) or deferred tax liabilities are recognised as identifiable assets and

Dr Deferred tax assetsCr Tax income or Goodwill


liabilities at the date of acquisitionbull Consequently those deferred tax assets and liabilities affect goodwill or

ldquonegative goodwillrdquobull However in accordance with HKAS 12 an entity does not recognise

deferred tax liabilities arising from the initial recognition of goodwill

36





bull For example the acquirer may be able to utilise the benefit of its unused tax losses against the future taxable profit of the acquiree

bull In such cases the acquireri d f d t t


bull recognises a deferred tax assetbull but does not include it as part of the accounting for business

combination andbull therefore does not take it into account in determining the

goodwill or the ldquonegative goodwillrdquo

Dr Tax expenses or GoodwillCr Deferred tax liabilities


Deferred tax assets can be recognised subsequent to the date of acquisition but the acquirer cannot recognise


ExampleExampleFair BV at Tax

value subsidiary base

Net assets acquired $1200 $1000 $1000Subsidiaryrsquos used tax losses $1000


negative goodwill nor does it increase the negative goodwill


yTax rate 20

rArrrArr Taxable temporary difference $200Deductible temporary difference $1000

Deferred tax assets may be recognised as one of the identifiable assets in the acquisition (subject to limitations)

37

bull An entity acquired a subsidiary that had deductible temporary differences of $300

6 Recognition of deferred tax chargecreditndash Deferred tax arising from a business combinationExample

bull The tax rate at the time of the acquisition was 30bull The resulting deferred tax asset of $90 was not recognised as an

identifiable asset in determining the goodwill of $500 that resulted from the business combination

bull 2 years after the combination the entity assessed that future taxable profit should be sufficient to recover the benefit of all the deductible temporary differences


bull The entity recognises a deferred tax asset of $90 and in PL deferred tax income of $90

bull The entity also reduces the carrying amount of goodwill by $90 and


The entity also reduces the carrying amount of goodwill by $90 and recognises an expense for this amount in profit or loss

bull Consequently the cost of the goodwill is reduces to $410 being the amount that would have been recognised had the deferred tax asset of $90 been recognised as an identifiable asset at the acquisition date

bull If the tax rate had increased to 40 the entity would recognisea deferred tax asset of $120 ($300 at 40) and in PL deferred tax income of $120


income of $120bull If the tax rate had decreased to 20 the entity would recognise

a deferred tax asset of $60 ($300 at 20) and deferred tax income of $60bull In both cases the entity would also reduce the carrying amount of

goodwill by $90 and recognise an expense for the amount in profit or loss

38


Todayrsquos Agenda





7 Presentation

a OffsetAn entity shall offset deferred tax assets and deferred tax liabilities if

d l if

7 Presentation

and only if a) the entity has a legally enforceable right to set off current tax

assets against current tax liabilities and b) the deferred tax assets and the deferred tax liabilities relate to

income taxes levied by the same taxation authority on either i) the same taxable entity or ii) different taxable entities which intend either


)bull to settle current tax liabilities and assets on a net basisbull or to realise the assets and settle the liabilities simultaneously

in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered

39

7 Presentation

a Offset

b Tax expenses and income

7 Presentation

bull The tax expense and income related to profit or loss from ordinary activities

bull shall be presented on the face of the income statement

p



Todayrsquos Agenda





40

Selected major items to be disclosed separatelySelected major items to be disclosed separately

bull Major components of tax expense (income)bull Tax relating to items that are charged or credited to equity

8 Disclosure

Tax relating to items that are charged or credited to equity bull A tax reconciliation

An explanation of the relationship between tax expense (income) and accounting profit in either or both of the following forms1 a numerical reconciliation between

bull tax expense (income) and bull the product of accounting profit multiplied by the applicable tax rate(s)


disclosing also the basis on which the applicable tax rate(s) is (are) computed or

2 a numerical reconciliation between bull the average effective tax rate and bull the applicable tax rate

disclosing also the basis on which the applicable tax rate is computed


8 DisclosureSelected major items to be disclosed separatelySelected major items to be disclosed separately

Example


Example note on tax reconciliation (no comparatives)HK$rsquo000

Profit before tax 3500

Tax on profit before tax calculated at applicable tax rate 613 175Tax effect of non-deductible expenses 50 14


Tax effect of non-taxable revenue (215) (61)Tax effect of unused tax losses not recognised 102 29Effect on opening deferred tax balances resulting froman increase in tax rate during the year 200 57Over provision in prior years (150) (43)

Tax expenses and effective tax rate 600 171

41



Tax relating to items that are charged or credited to equity bull A tax reconciliationbull An explanation of changes in the applicable tax rate(s) compared to

the previous periodbull The amount (and expiry date if any) of deductible temporary

differences unused tax losses and unused tax credits for which no deferred tax asset is recognised

bull The aggregate amount of temporary differences associated with


bull The aggregate amount of temporary differences associated with investments in subsidiaries branches and associates and interests in joint ventures for which deferred tax liabilities have not been recognised

bull In respect of each type of temporary difference and in respect of each type of unused tax losses and unused tax credits


Example

i) the amount of the deferred tax assets and liabilities recognised in the balance sheet for each period presented

ii) the amount of the deferred tax income or expense recognised in the income statement if this is not apparent from the changes in the amounts recognised in the balance sheet and

Example note Depreciationallowances in


Deferred tax excess of related Revaluationarising from depreciation of properties Total

HK$rsquo000 HK$rsquo000 HK$rsquo000At 1 January 2003 800 300 1100Charged to income statement (120) - (120)Charged to reserves - 2100 2100At 31 December 2003 680 2400 3080

42

bull In respect of discontinued operations the tax expense relating toi) the gain or loss on discontinuance and


ii) the profit or loss from the ordinary activities of the discontinued operation for the period together with the corresponding amounts for each prior period presented and


bull The amount of income tax consequences of dividends to shareholders of the entity that were proposed or declared before the financial


bull The amount of a deferred tax asset and the nature of the evidence supporting its recognition when a) the utilization of the deferred tax asset is dependent on future

taxable profits in excess of the profits arising from the reversal of existing taxable temporary differences and

b) th tit h ff d l i ith th t di

statements were authorized for issue but are not recognised as a liability in the financial statements


b) the entity has suffered a loss in either the current or preceding period in the tax jurisdiction to which the deferred tax asset relates

43


Todayrsquos Agenda




1 Issue2 Basis for Conclusions3 Conclusions


3 Conclusions4 Implication to Property in HK 5 Effective Date

II HK(SIC) Interpretation 21

Income Tax ndash Recovery of Revalued Non-Depreciable Assets1 Issue2 Basis for Conclusions3 Conclusions4 Implication to Property in HK 5 Effective Date


44

1 Issue

bull Under HKAS 1251 the measurement of deferred tax liabilities and assets should reflectndash the tax consequences that would follow from the manner in whichthe tax consequences that would follow from the manner in whichndash the entity expects at the balance sheet date to recover or settle the

carrying amount of those assets and liabilities that give rise to temporary differences

Recover


Recover through usage

Recover from sale

1 Issue

bull HKAS 1220 notes thatndash the revaluation of an asset does not always affect taxable profit (tax loss) in

the period of the revaluation andpndash that the tax base of the asset may not be adjusted as a result of the

revaluationbull If the future recovery of the carrying amount will be taxable

ndash any difference betweenbull the carrying amount of the revalued asset andbull its tax base

is a temporary difference and gives rise to a deferred tax liability or asset


p y g y

45

1 Issue

bull The issue is how to interpret the term ldquorecoveryrdquo in relation to an asset thatndash is not depreciated (non-depreciable asset) andis not depreciated (non depreciable asset) andndash is revalued under the revaluation model of HKAS 16 (HKAS 1631)

bull HK(SIC) Interpretation 21ldquoalso applies to investment properties whichndash are carried at revalued

amounts under HKAS 40 33

bull Interpretation 20 (superseded)ldquoalso applies to investment properties whichndash are carried at revalued

amounts under SSAP 13 rdquo


Implied thatbull an investment property if under HKAS 16

would be depreciable like land in HKbull the conclusion in HK(SIC) Interpretation

21 is not applicable to that property

amounts under HKAS 4033ndash but would be considered non-

depreciable if HKAS 16 were to be appliedrdquo

amounts under SSAP 13

2 Basis for Conclusions

bull The Framework indicates that an entity recognises an asset if it is probable that the future economic benefits associated with the asset will flow to the entityy

bull Generally those future economic benefits will be derived (and therefore the carrying amount of an asset will be recovered)ndash through salendash through use orndash through use and subsequent sale

Recover through use

and sale


Recover from sale


46


bull Recognition of depreciation implies thatndash the carrying amount of a depreciable asset

is expected to be recovered

Recovered through use (and final sale)

Depreciable assetis expected to be recovered

bull through use to the extent of its depreciable amount and

bull through sale at its residual value

( )

Recovered through sale

Non-depreciable

asset

bull Consistent with this the carrying amount of anon-depreciable asset such as land having an unlimited life will bendash recovered only through sale


recovered only through sale

bull That is because the asset is not depreciatedndash no part of its carrying amount is expected to be recovered (that is

consumed) through usebull Deferred taxes associated with the non-depreciable asset reflect the tax

consequences of selling the asset


bull The expected manner of recovery is not predicated on the basis of measuringthe carrying amount of the asset


Depreciable assety g

ndash For example if the carrying amount of a non-depreciable asset is measured at its value in use

bull the basis of measurement does not imply that the carrying amount of the asset is expected to be recovered through use but

( )


Non-depreciable

asset


gthrough its residual value upon ultimate disposal

47

3 Conclusions

bull The deferred tax liability or asset that arises from the revaluation of a non-depreciable asset under the revaluation model of HKAS 16 (HKAS 1631) should be measured

Recover through use

and sale

)ndash on the basis of the tax consequences that would follow from

recovery of the carrying amount of that asset through salebull regardless of the basis of measuring the carrying amount of that asset


Recover from sale


No depreciation impliesnot expected to recover from usage

3 Conclusions

Tax rate on sale Tax rate on usageNot the same

bull Accordingly if the tax law specifiesndash a tax rate applicable to the taxable amount derived from the sale of

an assetndash that differs from the tax rate applicable to the taxable amount derived

Used for non-depreciable asset Whatrsquos the implication on land in HK


from using an assetthe former rate is applied in measuring the deferred tax liability or asset related to a non-depreciable asset

48

4 Implication to Property in HK


bull Remember the scope identified in issue before helliphellip

bull HK(SIC) Interpretation 21ldquoalso applies to investment properties which






ndash are carried at revalued amounts under HKAS 4033

ndash but would be considered non-depreciable if HKAS 16 were to be appliedrdquo




bull It implies thatndash the management cannot rely on HK(SIC) Interpretation 21 to

assume the tax consequences being recovered from salendash It has to consider which tax consequences that would follow

from the manner in which the entity expects to recover the


carrying amount of the investment propertybull As an investment property is generally held to earn rentals

ndash the profits tax rate would best reflect the taxconsequences of an investment property in HK

ndash unless the management has a definite intention to dispose of the investment property in future

Different from the past in most cases

49


Tax rate on sale Tax rate on usage

Howrsquos your usage on your investment property


Recover from sale



Melco Development Limited (2005 Annual Report)Deferred Taxes related to Investment Properties

Case

Deferred Taxes related to Investment Propertiesbull In previous periods

ndash deferred tax consequences in respect of revalued investment properties were assessed on the basis of the tax consequence that would follow from recovery of the carrying amount of the properties through sale in accordance with the predecessor Interpretation

bull In the current period ndash the Group has applied HKAS Interpretation 21 Income Taxes ndash Recovery of


p pp p yRevalued Non-Depreciable Assets which removes the presumption that the carrying amount of investment properties are to be recovered through sale

50

4 Implication to Property in HKCase


bull Therefore the deferred tax consequences of the investment properties are now assessed

ndash on the basis that reflect the tax consequences that would follow from the manner in which the Group expects to recover the property at each balance sheet date

bull In the absence of any specific transitional provisions in HKAS Interpretation 21

Deferred Taxes related to Investment Properties


Interpretation 21ndash this change in accounting policy has been applied retrospectively resulting

in a recognition ofbull HK$9492000 deferred tax liability for the revaluation of the investment

properties and bull HK$9492000 deferred tax asset for unused tax losses on 1 January

2004


Interim Report 2005 clearly stated that

Case

bull The directors consider it inappropriate for the company to adopt two particular aspects of the newrevised HKFRSs as these would result in the financial statements in the view of the directors eitherbull not reflecting the commercial substance of the business orbull being subject to significant potential short-term volatility as explained

below helliphellip


51



bull HKAS 12 ldquoIncome Taxesrdquo together with HKAS-INT 21 ldquoIncome Taxes ndashRecovery of Revalued Non-Depreciable Assetsrdquo requires deferred taxation to be recognised on any revaluation movements on investment properties

bull It is further provided that any such deferred tax liability should be calculated at the profits tax rate in the case of assets which the management has no definite intention to sell

bull The company has not made such provision in respect of its HK investment properties since the directors consider that such provision would result in the


financial statements not reflecting the commercial substance of the businesssince should any such sale eventuate any gain would be regarded as capital in nature and would not be subject to any tax in HK

bull Should this aspect of HKAS 12 have been adopted deferred tax liabilities amounting to HK$2008 million on the revaluation surpluses arising from revaluation of HK investment properties would have been provided(estimate - over 12 of the net assets at 30 June 2005)


2006 Annual Report stated that

bull In prior years the group was required to apply the tax rate that would be applicable to the sale of investment properties to determine whether any amounts of deferred tax should be recognised on the revaluation of investment propertiesbull Consequently deferred tax was only provided to the extent that tax

allowances already given would be clawed back if the properties were disposed of at their carrying value as there would be no additional tax payable on disposal


payable on disposalbull As from 1 January 2005 in accordance with HK(SIC) Interpretation

21 the group recognises deferred tax on movements in the value of an investment property using tax rates that are applicable to the propertyrsquos use if the group has no intention to sell it and the property would have been depreciable had the group not adopted the fair value model helliphellip

52

III For Further Discussion

I t f HKFRSHKAS


Impact of some new HKFRSHKAS1 HKAS 16 17 and 402 HKAS 32 and 393 HKFRS 2

1 Impact of HKAS 16 17 and 40

Property leases and Investment property


53

1 Impact of HKAS 16 17 and 40Example

bull GV ldquopurchasedrdquo a property for $100 million in Hong Kong in 2006

ndash In fact it is a lease of land and building with 50 remaining yearsg g y

ndash Based on relative fair value of land and building

bull Estimated land element is $60 million

bull Estimated building element is $40 million

ndash The accounting policy of the company

bull Rental payments on operating lease is recognised over the lease term on a straight line basis

No tax deductionClaim CBAIBA or other


term on a straight line basis

bull Building is depreciated over 50 years on a straight-line basis

ndash What is the deferred tax implicationAlso depend on

the tax authorityrsquos practice

Property can be classified asbull Owner-occupied

property


Which HKASWhich HKASHKAS 16 amp 17

AccountingAccountingbull Land and building

separatedpropertybull Investment property

bull Property intended forsale in the ordinarycourse of business

bull Property being constructedfor 3rd parties

HKAS 40

HKAS 2

HKAS 11

separatedbull Single (Cost or FV)

say as a single assetbull Lower of cost or NRV

bull With attributable profitloss


for 3rd partiesbull Property leased out

under finance leasebull Property being constructed

for future use asinvestment property

HKAS 17

HKAS 16 amp 17

profitlossbull In substance sales

bull Single (Cost or FV) say as a single asset

54


property




separated

Example

property separated

If a property located in HK is ldquopurchasedrdquo and is carried at cost as officebull Land element can fulfil initial recognition exemption ie no deferred

tax recognisedbull Building element

deferred tax resulted from the temporary difference between its tax base and carrying amount


base and carrying amountFor example at year end 2006Carrying amount ($40M - $40M divide 50 years) $ 392 millionTax base ($40M times (1 ndash 4 CBA)) 384 millionTemporary difference $ 08 million HK profit tax rate (as recovered by usage) 175

How if IBA

Property can be classified asbull Investment property


Which HKASWhich HKASHKAS 40

AccountingAccountingbull Single (Cost or FV)

say as a single asset

Example


Simple hellip bull Follow HK(SIC) Interpretation 21 Income Tax ndash Recovery of Revalued

Non-Depreciable Assetsbull The management has to consider which tax consequences that would

follow from the manner in which the entity expects to recover the carrying amount of the investment property



bull the profits tax rate (ie 16) would best reflect the tax consequences of an investment property in HK

bull unless the management has a definite intention to dispose of the investment property in future

55

2 Impact of HKAS 32 and 39

Financial Instruments



bull Recap on selected items of HKAS 32 and 39HKAS 32

bull Preference shares ndash dividend as interest expensesbull Compound financial instrument

HKAS 39

at Fair Value through profit or loss

at Fair Value through equity

FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost

Loans and receivables

HTM investments

AFS financial assets

Also depend on the tax authorityrsquos

practice

Howrsquos HKrsquos IRD practice

56


bull Recap on selected items of HKAS 32HKAS 32


DIPN 4221bull The labels of ldquoliabilityrdquo and ldquoequityrdquo may not reflect the legal nature of the

financial instrumentbull Though the preference shares are accounted for as financial liabilities and

the dividends declared are charged as interest expenses to the profit and l t d HKAS 32


loss account under HKAS 32ndash the preference shares will be treated for tax purposes as share capital

because the relationship between the holders and the company is not a debtor and creditor relationship

bull Dividends declared will not be allowed fordeduction as interest expenses andwill not be assessed as interest income

Any deferred tax implication




DIPN 4222bull HKAS 32 requires the issuer of a compound financial instrument to split the

instrument into a liability component and an equity component and present them separately in the balance sheet

bull The Department


p ndash while recognising that the accounting treatment might reflect the

economic substancendash will adhere to the legal form of the

compound financial instrument andtreat the compound financial instrumentfor tax purposes as a whole


57

bull In accordance with HKAS 32 Financial Instruments Disclosure and Presentation

th i f d fi i l i t t (f l


bull the issuer of a compound financial instrument (for example a convertible bond) classifies the instrumentrsquos bull liability component as a liability andbull equity component as equity


bull In some jurisdictions the tax base of the liability component on initial recognition is equal to the initial carrying amount of the sum of the liability and equity components


liability and equity componentsbull The resulting taxable temporary difference arises from the initial

recognition of the equity component separately from the liability component

bull Therefore the exception set out in HKAS 1215(b) does not applybull Consequently an entity recognises the resulting deferred tax liabilitybull In accordance with HKAS 1261


bull the deferred tax is charged directly to the carrying amount of the equity component

bull In accordance with HKAS 1258bull subsequent changes in the deferred tax liability are recognised in

the income statement as deferred tax expense (income)

58

2 Impact of HKAS 32 and 39Example

bull An entity issues a non-interest-bearing convertible loan and receives $1000 on 31 Dec 2007

bull The convertible loan will be repayable at par on 1 January 2011bull In accordance with HKAS 32 Financial Instruments Disclosure and

Presentation the entity classifies the instrumentrsquos liability component as a liability and the equity component as equity

bull The entity assigns an initial carrying amount of $751 to the liability component of the convertible loan and $249 to the equity component

bull Subsequently the entity recognizes imputed discount as interest


expenses at an annual rate of 10 on the carrying amount of the liability component at the beginning of the year

bull The tax authorities do not allow the entity to claim any deduction for the imputed discount on the liability component of the convertible loan

bull The tax rate is 40


The temporary differences associated with the liability component and the resulting deferred tax liability and deferred tax expense and income are as follows

2007 2008 2009 2010

Carrying amount of liability component 751 826 909 1000Tax base 1000 1000 1000 1000Taxable temporary difference 249 174 91 -

Opening deferred tax liability tax at 40 0 100 70 37


p g y Deferred tax charged to equity 100 - - -Deferred tax expense (income) - (30) (33) (37)Closing deferred tax liability at 40 100 70 37 -

59


As explained in HKAS 1223 at 31 Dec 2007 the entity recognises the resulting deferred tax liability by adjusting the initial carrying amount of the equity component of the convertible liability Therefore the amounts recognised at that d t f lldate are as follows

Liability component $ 751Deferred tax liability 100Equity component (249 less 100) 149

1000

Subsequent changes in the deferred tax liability are recognised in the income statement as tax income (see HKAS 1223) Therefore the entityrsquos income

i f ll


statement is as follows2007 2008 2009 2010

Interest expense (imputed discount) - 75 83 91Deferred tax (income) - (30) (33) (37)

- 45 50 54


bull Recap on selected items of HKAS 39

DIPN 2113

FA at FV through PL


bull On the whole the Department will follow the accounting treatment stipulated in HKAS 39 in the recognition of profits or losses in respect of financial assets of revenue nature (see para 23 to 26)

bull Accordingly for financial assets or financial liabilities at fair value through profit or lossndash the change in fair value is assessed or allowed when the change is taken

to the profit and loss account


to the profit and loss accountbull For available-for-sale financial assets

ndash the change in fair value that is taken to the equity account is not taxable or deductible until the assets are disposed of

ndash The cumulative change in fair value is assessed or deducted when it is recognised in the profit and loss account in the year of disposal

60



DIPN 2113

bull For loans and receivables and held-to-maturity investmentsndash the gain or loss is taxable or deductible when the financial asset is

bull derecognised or impaired andbull through the amortisation process

bull Valuation methods previously permitted for financial instruments ndash such as the lower of cost or net realisable value basis


ndash will not be accepted


HTM investments



DIPN 2114

bull Under HKAS 39 the amortised cost of a financial asset or financial liability should be measured using the ldquoeffective interest methodrdquo

bull Under HKAS 18 interest income is also required to be recognised using the effective interest method The effective interest rate is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument

bull The practical effect is that interest expenses costs of issue and income


The practical effect is that interest expenses costs of issue and income (including interest premium and discount) are spread over the term of the financial instrument which may cover more than one accounting period

bull Thus a discount expense and other costs of issue should not be fully deductible in the year in which a financial instrument is issued

bull Equally a discount income cannot be deferred for assessment until the financial instrument is redeemed

61



DIPN 2130

bull HKAS 39 contains rules governing the determination of impairment lossesndash In short all financial assets must be evaluated for impairment except for

those measured at fair value through profit or loss ndash As a result the carrying amount of loans and receivables should have

reflected the bad debts and estimated doubtful debtsbull However since section 16(1)(d) lays down specific provisions for the

deduction of bad debts and estimated doubtful debts


deduction of bad debts and estimated doubtful debtsndash the statutory tests for deduction of bad debts and estimated doubtful debts

will applybull Impairment losses on other financial assets (eg bonds acquired by a trader)

will be considered for deduction in the normal way



d

FA at FV through PL

HTM investments

AFS financial assets FV recognised but not taxable until derecognition

Impairment loss deemed as non-specific not allowed for deduction



deduction

62

2 Impact of HKAS 32 and 39Case

2005 Interim Report2005 Interim Reportbull From 1 January 2005 deferred tax

ndash relating to fair value re-measurement of available-for-sale investments and cash flow hedges which are charged or credited directly to equitybull is also credited or charged directly to equity andbull is subsequently recognised in the income statement when the

deferred fair value gain or loss is recognised in the income


statement

3 Impact of HKFRS 2

Share based payment transactions


63

bull Share-based payment charged to PL as an expensebull HKAS 12 states that

In some tax jurisdictions an entity receives a tax

3 Impact of HKFRS 2

bull In some tax jurisdictions an entity receives a tax deduction (ie an amount that is deductible in determining taxable profit) that relates to remuneration paid in shares share options or other equity instruments of the entity

bull The amount of that tax deduction maybull differ from the related cumulative

remuneration expense and

Tax base = Positive (Future deduction)

Carrying amount = Nil


bull arise in a later accounting period

bull In some jurisdictions an entity maybull recognise an expense for the

consumption of employee services

3 Impact of HKFRS 2Example

consumption of employee services received as consideration for share options granted in accordance with HKFRS 2 Share-based Payment and

bull not receive a tax deduction until the share options are exercised with the measurement of the tax deduction based on the entityrsquos share price at the

Tax base = Positive(Future deduction)



PLPL

y pdate of exercise

implies a debit for future tax deduction


64

bull If the amount of the tax deduction (or estimated future tax deduction) exceedsthe amount of the related cumulative


the amount of the related cumulative remuneration expense

this indicates that the tax deduction relates not only to remuneration expense but also to an equity item

bull In this situationthe excess of the associated current or deferred tax shall be recognised




PLPL

deferred tax shall be recognised directly in equity

Deductible temporary differenceEquityEquity

In HK In HK DeductibleDeductible

An article explains thatbull In determining the deductibility of the share-based payment associated

with the employee share option or share award scheme the following


p y p gkey issues (which may not be exhaustive) should be consideredbull Whether the entire amount recognised in the profit and loss account

represents an outgoing or expense of the entitybull Whether the recognised amount is of revenue or capital nature andbull The point in time at which the recognised amount qualifies for deduction

eg when it is charged to profit and loss account or only when all of the vesting conditions have been satisfied

bull There are however no standard answers to the above questions


There are however no standard answers to the above questionsbull The Hong Kong profits tax implications of each individual employee

share option or share award scheme vary according to its structure


65


Full set of slides in PDF can be found in N l CPA hkwwwNelsonCPAcomhk


Nelson LamNelson Lam 林智遠林智遠nelsonnelsoncpacomhkwwwnelsoncpacomhk


Full set of slides in PDF can be found in N l CPA hk

QampA SessionQampA SessionQampA SessionQampA Session

wwwNelsonCPAcomhk



2

I Introduction

Objective of HKAS 12Objective of HKAS 12bull The objective of IAS 12 is

to prescribe the accounting treatment for incomendash to prescribe the accounting treatment for income taxes

bull The principal issue in accounting for income taxes is ndash how to account for the current and future tax

consequences ofa) the future recovery (settlement) of the carrying

amount of assets (liabilities) that are


recognised in an entitys balance sheet andb) transactions and other events of the current

period that are recognised in an entitys financial statements

I Introduction

Scope of HKAS 12Scope of HKAS 12bull HKAS 12 shall be applied in accounting for income taxesbull For the purposes of HKAS 12 income taxes includebull For the purposes of HKAS 12 income taxes include

bull all domestic and foreign taxes which are based on taxable profits

bull taxes such as withholding taxes which are payable by a subsidiary associate or joint venture on distributions to the reporting entity

bull HKAS 12 does not deal with the methodsof accounting for


gbull government grants (see HKAS 20) or bull investment tax credits

bull However HKAS 12 does deal with the accounting for bull temporary differences that may arise from

such grants or investment tax credits

3

Incometaxes

I Introduction

taxes

Deferredtaxes

Currenttaxes



TaxLiabilities

TaxAssets

TaxLiabilities

TaxAssets




Todayrsquos Agenda



4

Incometaxes

A Current Taxes

taxes

Currenttaxes

Current Current


TaxLiabilities

TaxAssets

A Current Taxes







5















6











Todayrsquos Agenda





7

Incometaxes

B Deferred Taxes

taxes

Deferredtaxes

Deferred Deferred


TaxLiabilities

TaxAssets




carrying amount and



Temporarydifference


its tax base


difference

Tax base

8



between

Deferredtaxes

Temporarydifference





difference

Tax base




Tax base

9

2 Tax Base


Future taxable +

Future deductible

Assets

amount amount+

amount


Future deductible

amount+


Liabilities

f














Tax base

10

2 Tax BaseExample







taxable














2 Tax BaseExample













What is it

11



balance sheet and


amount

bull its tax base


Tax base










12


Taxable





difference



Carrying amount




ForAssets

Positive

Negative

amount



differenceFor

LiabilitiesPositive

Negative


13



Carrying amount




ForAssets

Positive

Negative


Deferred tax asset


differenceFor

LiabilitiesPositive




Taxable Deferred






Deferred tax asset






difference





credits

14




















15







entity in the group










16


of $400000

Example






Answers



8 years$ 200000





$ 800000

17


Answers

Example


Addition 2000 2000


2007 year end 1800 1200



Answers

Example



Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 15025


18

Answers




Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 150




2008 year end 1600 960 640 160 10


2009 year end 1400 768 632 158 (2)













19







Deferred tax asset





difference


Todayrsquos Agenda





20

Taxable Deferred


All recognised




Deferred tax asset



difference


Taxable

Except for







Deferred tax asset






difference



21


Case













Deferred tax asset





difference




credits

22




















tax asset







23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



3

Incometaxes

I Introduction

taxes

Deferredtaxes

Currenttaxes



TaxLiabilities

TaxAssets

TaxLiabilities

TaxAssets




Todayrsquos Agenda



4

Incometaxes

A Current Taxes

taxes

Currenttaxes

Current Current


TaxLiabilities

TaxAssets

A Current Taxes







5















6











Todayrsquos Agenda





7

Incometaxes

B Deferred Taxes

taxes

Deferredtaxes

Deferred Deferred


TaxLiabilities

TaxAssets




carrying amount and



Temporarydifference


its tax base


difference

Tax base

8



between

Deferredtaxes

Temporarydifference





difference

Tax base




Tax base

9

2 Tax Base


Future taxable +

Future deductible

Assets

amount amount+

amount


Future deductible

amount+


Liabilities

f














Tax base

10

2 Tax BaseExample







taxable














2 Tax BaseExample













What is it

11



balance sheet and


amount

bull its tax base


Tax base










12


Taxable





difference



Carrying amount




ForAssets

Positive

Negative

amount



differenceFor

LiabilitiesPositive

Negative


13



Carrying amount




ForAssets

Positive

Negative


Deferred tax asset


differenceFor

LiabilitiesPositive




Taxable Deferred






Deferred tax asset






difference





credits

14




















15







entity in the group










16


of $400000

Example






Answers



8 years$ 200000





$ 800000

17


Answers

Example


Addition 2000 2000


2007 year end 1800 1200



Answers

Example



Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 15025


18

Answers




Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 150




2008 year end 1600 960 640 160 10


2009 year end 1400 768 632 158 (2)













19







Deferred tax asset





difference


Todayrsquos Agenda





20

Taxable Deferred


All recognised




Deferred tax asset



difference


Taxable

Except for







Deferred tax asset






difference



21


Case













Deferred tax asset





difference




credits

22




















tax asset







23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



4

Incometaxes

A Current Taxes

taxes

Currenttaxes

Current Current


TaxLiabilities

TaxAssets

A Current Taxes







5















6











Todayrsquos Agenda





7

Incometaxes

B Deferred Taxes

taxes

Deferredtaxes

Deferred Deferred


TaxLiabilities

TaxAssets




carrying amount and



Temporarydifference


its tax base


difference

Tax base

8



between

Deferredtaxes

Temporarydifference





difference

Tax base




Tax base

9

2 Tax Base


Future taxable +

Future deductible

Assets

amount amount+

amount


Future deductible

amount+


Liabilities

f














Tax base

10

2 Tax BaseExample







taxable














2 Tax BaseExample













What is it

11



balance sheet and


amount

bull its tax base


Tax base










12


Taxable





difference



Carrying amount




ForAssets

Positive

Negative

amount



differenceFor

LiabilitiesPositive

Negative


13



Carrying amount




ForAssets

Positive

Negative


Deferred tax asset


differenceFor

LiabilitiesPositive




Taxable Deferred






Deferred tax asset






difference





credits

14




















15







entity in the group










16


of $400000

Example






Answers



8 years$ 200000





$ 800000

17


Answers

Example


Addition 2000 2000


2007 year end 1800 1200



Answers

Example



Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 15025


18

Answers




Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 150




2008 year end 1600 960 640 160 10


2009 year end 1400 768 632 158 (2)













19







Deferred tax asset





difference


Todayrsquos Agenda





20

Taxable Deferred


All recognised




Deferred tax asset



difference


Taxable

Except for







Deferred tax asset






difference



21


Case













Deferred tax asset





difference




credits

22




















tax asset







23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



5















6











Todayrsquos Agenda





7

Incometaxes

B Deferred Taxes

taxes

Deferredtaxes

Deferred Deferred


TaxLiabilities

TaxAssets




carrying amount and



Temporarydifference


its tax base


difference

Tax base

8



between

Deferredtaxes

Temporarydifference





difference

Tax base




Tax base

9

2 Tax Base


Future taxable +

Future deductible

Assets

amount amount+

amount


Future deductible

amount+


Liabilities

f














Tax base

10

2 Tax BaseExample







taxable














2 Tax BaseExample













What is it

11



balance sheet and


amount

bull its tax base


Tax base










12


Taxable





difference



Carrying amount




ForAssets

Positive

Negative

amount



differenceFor

LiabilitiesPositive

Negative


13



Carrying amount




ForAssets

Positive

Negative


Deferred tax asset


differenceFor

LiabilitiesPositive




Taxable Deferred






Deferred tax asset






difference





credits

14




















15







entity in the group










16


of $400000

Example






Answers



8 years$ 200000





$ 800000

17


Answers

Example


Addition 2000 2000


2007 year end 1800 1200



Answers

Example



Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 15025


18

Answers




Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 150




2008 year end 1600 960 640 160 10


2009 year end 1400 768 632 158 (2)













19







Deferred tax asset





difference


Todayrsquos Agenda





20

Taxable Deferred


All recognised




Deferred tax asset



difference


Taxable

Except for







Deferred tax asset






difference



21


Case













Deferred tax asset





difference




credits

22




















tax asset







23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



6











Todayrsquos Agenda





7

Incometaxes

B Deferred Taxes

taxes

Deferredtaxes

Deferred Deferred


TaxLiabilities

TaxAssets




carrying amount and



Temporarydifference


its tax base


difference

Tax base

8



between

Deferredtaxes

Temporarydifference





difference

Tax base




Tax base

9

2 Tax Base


Future taxable +

Future deductible

Assets

amount amount+

amount


Future deductible

amount+


Liabilities

f














Tax base

10

2 Tax BaseExample







taxable














2 Tax BaseExample













What is it

11



balance sheet and


amount

bull its tax base


Tax base










12


Taxable





difference



Carrying amount




ForAssets

Positive

Negative

amount



differenceFor

LiabilitiesPositive

Negative


13



Carrying amount




ForAssets

Positive

Negative


Deferred tax asset


differenceFor

LiabilitiesPositive




Taxable Deferred






Deferred tax asset






difference





credits

14




















15







entity in the group










16


of $400000

Example






Answers



8 years$ 200000





$ 800000

17


Answers

Example


Addition 2000 2000


2007 year end 1800 1200



Answers

Example



Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 15025


18

Answers




Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 150




2008 year end 1600 960 640 160 10


2009 year end 1400 768 632 158 (2)













19







Deferred tax asset





difference


Todayrsquos Agenda





20

Taxable Deferred


All recognised




Deferred tax asset



difference


Taxable

Except for







Deferred tax asset






difference



21


Case













Deferred tax asset





difference




credits

22




















tax asset







23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



7

Incometaxes

B Deferred Taxes

taxes

Deferredtaxes

Deferred Deferred


TaxLiabilities

TaxAssets




carrying amount and



Temporarydifference


its tax base


difference

Tax base

8



between

Deferredtaxes

Temporarydifference





difference

Tax base




Tax base

9

2 Tax Base


Future taxable +

Future deductible

Assets

amount amount+

amount


Future deductible

amount+


Liabilities

f














Tax base

10

2 Tax BaseExample







taxable














2 Tax BaseExample













What is it

11



balance sheet and


amount

bull its tax base


Tax base










12


Taxable





difference



Carrying amount




ForAssets

Positive

Negative

amount



differenceFor

LiabilitiesPositive

Negative


13



Carrying amount




ForAssets

Positive

Negative


Deferred tax asset


differenceFor

LiabilitiesPositive




Taxable Deferred






Deferred tax asset






difference





credits

14




















15







entity in the group










16


of $400000

Example






Answers



8 years$ 200000





$ 800000

17


Answers

Example


Addition 2000 2000


2007 year end 1800 1200



Answers

Example



Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 15025


18

Answers




Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 150




2008 year end 1600 960 640 160 10


2009 year end 1400 768 632 158 (2)













19







Deferred tax asset





difference


Todayrsquos Agenda





20

Taxable Deferred


All recognised




Deferred tax asset



difference


Taxable

Except for







Deferred tax asset






difference



21


Case













Deferred tax asset





difference




credits

22




















tax asset







23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



8



between

Deferredtaxes

Temporarydifference





difference

Tax base




Tax base

9

2 Tax Base


Future taxable +

Future deductible

Assets

amount amount+

amount


Future deductible

amount+


Liabilities

f














Tax base

10

2 Tax BaseExample







taxable














2 Tax BaseExample













What is it

11



balance sheet and


amount

bull its tax base


Tax base










12


Taxable





difference



Carrying amount




ForAssets

Positive

Negative

amount



differenceFor

LiabilitiesPositive

Negative


13



Carrying amount




ForAssets

Positive

Negative


Deferred tax asset


differenceFor

LiabilitiesPositive




Taxable Deferred






Deferred tax asset






difference





credits

14




















15







entity in the group










16


of $400000

Example






Answers



8 years$ 200000





$ 800000

17


Answers

Example


Addition 2000 2000


2007 year end 1800 1200



Answers

Example



Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 15025


18

Answers




Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 150




2008 year end 1600 960 640 160 10


2009 year end 1400 768 632 158 (2)













19







Deferred tax asset





difference


Todayrsquos Agenda





20

Taxable Deferred


All recognised




Deferred tax asset



difference


Taxable

Except for







Deferred tax asset






difference



21


Case













Deferred tax asset





difference




credits

22




















tax asset







23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



9

2 Tax Base


Future taxable +

Future deductible

Assets

amount amount+

amount


Future deductible

amount+


Liabilities

f














Tax base

10

2 Tax BaseExample







taxable














2 Tax BaseExample













What is it

11



balance sheet and


amount

bull its tax base


Tax base










12


Taxable





difference



Carrying amount




ForAssets

Positive

Negative

amount



differenceFor

LiabilitiesPositive

Negative


13



Carrying amount




ForAssets

Positive

Negative


Deferred tax asset


differenceFor

LiabilitiesPositive




Taxable Deferred






Deferred tax asset






difference





credits

14




















15







entity in the group










16


of $400000

Example






Answers



8 years$ 200000





$ 800000

17


Answers

Example


Addition 2000 2000


2007 year end 1800 1200



Answers

Example



Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 15025


18

Answers




Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 150




2008 year end 1600 960 640 160 10


2009 year end 1400 768 632 158 (2)













19







Deferred tax asset





difference


Todayrsquos Agenda





20

Taxable Deferred


All recognised




Deferred tax asset



difference


Taxable

Except for







Deferred tax asset






difference



21


Case













Deferred tax asset





difference




credits

22




















tax asset







23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



10

2 Tax BaseExample







taxable














2 Tax BaseExample













What is it

11



balance sheet and


amount

bull its tax base


Tax base










12


Taxable





difference



Carrying amount




ForAssets

Positive

Negative

amount



differenceFor

LiabilitiesPositive

Negative


13



Carrying amount




ForAssets

Positive

Negative


Deferred tax asset


differenceFor

LiabilitiesPositive




Taxable Deferred






Deferred tax asset






difference





credits

14




















15







entity in the group










16


of $400000

Example






Answers



8 years$ 200000





$ 800000

17


Answers

Example


Addition 2000 2000


2007 year end 1800 1200



Answers

Example



Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 15025


18

Answers




Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 150




2008 year end 1600 960 640 160 10


2009 year end 1400 768 632 158 (2)













19







Deferred tax asset





difference


Todayrsquos Agenda





20

Taxable Deferred


All recognised




Deferred tax asset



difference


Taxable

Except for







Deferred tax asset






difference



21


Case













Deferred tax asset





difference




credits

22




















tax asset







23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



11



balance sheet and


amount

bull its tax base


Tax base










12


Taxable





difference



Carrying amount




ForAssets

Positive

Negative

amount



differenceFor

LiabilitiesPositive

Negative


13



Carrying amount




ForAssets

Positive

Negative


Deferred tax asset


differenceFor

LiabilitiesPositive




Taxable Deferred






Deferred tax asset






difference





credits

14




















15







entity in the group










16


of $400000

Example






Answers



8 years$ 200000





$ 800000

17


Answers

Example


Addition 2000 2000


2007 year end 1800 1200



Answers

Example



Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 15025


18

Answers




Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 150




2008 year end 1600 960 640 160 10


2009 year end 1400 768 632 158 (2)













19







Deferred tax asset





difference


Todayrsquos Agenda





20

Taxable Deferred


All recognised




Deferred tax asset



difference


Taxable

Except for







Deferred tax asset






difference



21


Case













Deferred tax asset





difference




credits

22




















tax asset







23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



12


Taxable





difference



Carrying amount




ForAssets

Positive

Negative

amount



differenceFor

LiabilitiesPositive

Negative


13



Carrying amount




ForAssets

Positive

Negative


Deferred tax asset


differenceFor

LiabilitiesPositive




Taxable Deferred






Deferred tax asset






difference





credits

14




















15







entity in the group










16


of $400000

Example






Answers



8 years$ 200000





$ 800000

17


Answers

Example


Addition 2000 2000


2007 year end 1800 1200



Answers

Example



Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 15025


18

Answers




Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 150




2008 year end 1600 960 640 160 10


2009 year end 1400 768 632 158 (2)













19







Deferred tax asset





difference


Todayrsquos Agenda





20

Taxable Deferred


All recognised




Deferred tax asset



difference


Taxable

Except for







Deferred tax asset






difference



21


Case













Deferred tax asset





difference




credits

22




















tax asset







23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



13



Carrying amount




ForAssets

Positive

Negative


Deferred tax asset


differenceFor

LiabilitiesPositive




Taxable Deferred






Deferred tax asset






difference





credits

14




















15







entity in the group










16


of $400000

Example






Answers



8 years$ 200000





$ 800000

17


Answers

Example


Addition 2000 2000


2007 year end 1800 1200



Answers

Example



Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 15025


18

Answers




Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 150




2008 year end 1600 960 640 160 10


2009 year end 1400 768 632 158 (2)













19







Deferred tax asset





difference


Todayrsquos Agenda





20

Taxable Deferred


All recognised




Deferred tax asset



difference


Taxable

Except for







Deferred tax asset






difference



21


Case













Deferred tax asset





difference




credits

22




















tax asset







23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



14




















15







entity in the group










16


of $400000

Example






Answers



8 years$ 200000





$ 800000

17


Answers

Example


Addition 2000 2000


2007 year end 1800 1200



Answers

Example



Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 15025


18

Answers




Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 150




2008 year end 1600 960 640 160 10


2009 year end 1400 768 632 158 (2)













19







Deferred tax asset





difference


Todayrsquos Agenda





20

Taxable Deferred


All recognised




Deferred tax asset



difference


Taxable

Except for







Deferred tax asset






difference



21


Case













Deferred tax asset





difference




credits

22




















tax asset







23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



15







entity in the group










16


of $400000

Example






Answers



8 years$ 200000





$ 800000

17


Answers

Example


Addition 2000 2000


2007 year end 1800 1200



Answers

Example



Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 15025


18

Answers




Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 150




2008 year end 1600 960 640 160 10


2009 year end 1400 768 632 158 (2)













19







Deferred tax asset





difference


Todayrsquos Agenda





20

Taxable Deferred


All recognised




Deferred tax asset



difference


Taxable

Except for







Deferred tax asset






difference



21


Case













Deferred tax asset





difference




credits

22




















tax asset







23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



16


of $400000

Example






Answers



8 years$ 200000





$ 800000

17


Answers

Example


Addition 2000 2000


2007 year end 1800 1200



Answers

Example



Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 15025


18

Answers




Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 150




2008 year end 1600 960 640 160 10


2009 year end 1400 768 632 158 (2)













19







Deferred tax asset





difference


Todayrsquos Agenda





20

Taxable Deferred


All recognised




Deferred tax asset



difference


Taxable

Except for







Deferred tax asset






difference



21


Case













Deferred tax asset





difference




credits

22




















tax asset







23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



17


Answers

Example


Addition 2000 2000


2007 year end 1800 1200



Answers

Example



Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 15025


18

Answers




Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 150




2008 year end 1600 960 640 160 10


2009 year end 1400 768 632 158 (2)













19







Deferred tax asset





difference


Todayrsquos Agenda





20

Taxable Deferred


All recognised




Deferred tax asset



difference


Taxable

Except for







Deferred tax asset






difference



21


Case













Deferred tax asset





difference




credits

22




















tax asset







23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



18

Answers




Deferred tax

liabilities

Deferred tax charge

(credit)

Addition 2000 2000


2007 year end 1800 1200 600 150 150




2008 year end 1600 960 640 160 10


2009 year end 1400 768 632 158 (2)













19







Deferred tax asset





difference


Todayrsquos Agenda





20

Taxable Deferred


All recognised




Deferred tax asset



difference


Taxable

Except for







Deferred tax asset






difference



21


Case













Deferred tax asset





difference




credits

22




















tax asset







23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



19







Deferred tax asset





difference


Todayrsquos Agenda





20

Taxable Deferred


All recognised




Deferred tax asset



difference


Taxable

Except for







Deferred tax asset






difference



21


Case













Deferred tax asset





difference




credits

22




















tax asset







23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



20

Taxable Deferred


All recognised




Deferred tax asset



difference


Taxable

Except for







Deferred tax asset






difference



21


Case













Deferred tax asset





difference




credits

22




















tax asset







23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



21


Case













Deferred tax asset





difference




credits

22




















tax asset







23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



22




















tax asset







23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



23

Yes




R i d f d t

No

No



N t i

Yes

Yes










radicradicradic

times




24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



24














Goodwill


25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



25
















f il i t bl t diff



Goodwill


26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




LiabilityLiability






Deferred tax asset


Deferred tax asset






difference


difference





28
















streams

29









Example





30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



26









Goodwill





tax deductible




$2 illiDeferred






tax liability

27




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Deferred tax asset


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28
















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29









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31

















Example












32

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33









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34













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35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



27




LiabilityLiability






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28
















streams

29









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30














31

















Example












32

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33









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34













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35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

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a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



28
















streams

29









Example





30














31

















Example












32

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33









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34













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35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

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7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



29









Example





30














31

















Example












32

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33









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34













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35





















36





















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37

















38


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d l if

7 Presentation







39

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7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



30














31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

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a Offset


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p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



31

















Example












32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



32

5 Measurement











5 MeasurementCase










33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



33









That simple


Todayrsquos Agenda





34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



34













Example








35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



35





















36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



36





















yTax rate 20



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



37

















38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



38


Todayrsquos Agenda





7 Presentation


d l if

7 Presentation







39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



39

7 Presentation

a Offset


7 Presentation



p



Todayrsquos Agenda





40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



40



8 Disclosure










Example








41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



41











Example







42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



42













43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



43


Todayrsquos Agenda










44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



44

1 Issue



Recover



Recover from sale

1 Issue







p y g y

45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



45

1 Issue
















Recover through use

and sale


Recover from sale


46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



46








( )


Non-depreciable

asset













( )


Non-depreciable

asset



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



47

3 Conclusions


Recover through use

and sale




Recover from sale



3 Conclusions







48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



48























49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



49





Recover from sale




Case






50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



50











2004



Case


below helliphellip


51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



51
















52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



52


I t f HKFRSHKAS






53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



53
















property







HKAS 40

HKAS 2

HKAS 11








HKAS 17

HKAS 16 amp 17



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



54


property




separated

Example

property separated






How if IBA






Example









55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



55







HKAS 39



FA at FV through PL

AFS financial



at Amortised Cost

at Amortised Cost

at Cost


HTM investments



practice


56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



56

















bull The Department






57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



57















58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



58













2007 2008 2009 2010





59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



59




1000


i f ll




- 45 50 54



DIPN 2113

FA at FV through PL









60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



60



DIPN 2113







HTM investments



DIPN 2114








61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



61



DIPN 2130











d

FA at FV through PL

HTM investments





deduction

62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



62






statement

3 Impact of HKFRS 2



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



63



3 Impact of HKFRS 2
















PLPL

y pdate of exercise



64









PLPL















65








wwwNelsonCPAcomhk



64









PLPL















65








wwwNelsonCPAcomhk



65








wwwNelsonCPAcomhk



income taxes - nelson cpa · 2007-10-07 · • hkas 12 shall be applied in accounting for income...

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