Tax Base of a Company’s Assets and Liabilities

An asset’s tax base is the amount that will be deductible for tax purposes in future periods once the economic benefits are realized and a company can recover the carrying amount of the asset. If the economic benefit will not…

More Details
Creation of Deferred Tax Liabilities and Assets

A deferred tax asset arises whenever a company’s taxable income is greater than its accounting profit, which results in an excess amount being paid for income taxes, which the company expects to recover during the course of future operations. A…

More Details
Differences between Accounting Profit and Taxable Income

Accounting profit, also referred to as income before taxes, is reported on a company’s income statement in accordance with the prevailing accounting standards. Taxable income is the portion of a company’s income that is subject to income taxes in accordance…

More Details
Effect of Finance Leases and Operating Leases on Financial Statements

Introduction In substance, a finance (or capital) lease is equivalent to the purchase of an asset by a buyer (or lessee) that is directly financed by the seller (or lessor). An operating lease is an agreement providing the lessee with…

More Details
Effects of Assets Leases on Financial Statements and Ratios

Introduction A lease is a contract between a lessor or owner of an asset, and a lessee, who is seeking to use the asset. In exchange for the right to the use of the assets, the lessee makes periodic lease…

More Details
Financial Reporting of Investment Property

Introduction IFRS defines investment property as property that is owned (or, in some cases, leased under a finance lease) for the purpose of earning rentals or capital appreciation or both. Cost Model and Fair Value Model IFRS allows companies to…

More Details
Property, Plant, and Equipment and Intangible Assets

Analysts can use disclosures to better understand a company’s investments in tangible and intangible assets, how those investments changed during a reporting period, how those changes affected current financial performance, and what those changes might indicate about future performance. Disclosures…

More Details
Derecognition of Property, Plant, and Equipment and Intangible Assets

Derecognition of an asset occurs whenever an asset is disposed of or is not expected to provide any future benefits from either its use or disposal. As a result, the asset is removed from the financial statements. Disposal of a…

More Details
Describe the Revaluation Model

The revaluation model is an alternative to the cost model and is used for the periodic valuation and reporting of long-lived assets. Whereas IFRS permits the use of either the revaluation model or the cost model, the revaluation model is…

More Details
Choice of Amortisation Method and Assumptions

Amortization expense, financial statements and the ratios derived from them may be significantly impacted by a company’s selected amortization method and accompanying assumptions and estimates. The Effect of the Choice of Amortisation Method and Assumptions on Amortisation Expense, Financial Statements,…

More Details