15
The deferred tax asset would be $15 million x 30%, i.e. $4·5 million subject to there being sufficient taxable profit. The deferred tax provision relating to these assets would have been:
Carrying Tax Temporary
Amount Base Difference
$m $m $m
Property 50 48 2
Vehicles 30 28 2
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4
Other taxable temporary differences 5
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9
$9 million at 30%, i.e. $2·7 million
The impact on the income statement would be significant as the deferred tax provision of $2·7 million would be released and a deferred tax asset of $4·5 million credited to it.
(b) The shares issued to the management of Hash by Abbott (three million ordinary shares of $1) for the purchase of the company would not be accounted for under IFRS2 ‘Share-based payment’ but would be dealt with under IFRS3 ‘Business Combinations’.
