Using the fundamental principle from IAS 12 Income Tax, explain whether a deferred tax asset or a
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Question:
Using the fundamental principle from IAS 12 Income Tax, explain whether a deferred tax asset or a deferred tax liability should be recognized in relation to the following scenarios.
1. Development costs
Development costs of $1000 that are recognized as an asset (i.e. capitalized) and will be amortized to the statement of P/L and OCI. The costs were deducted in determining taxable profit when they were incurred (i.e. when the cash was paid).
2. Trade Receivables
Carrying amount of trade receivables is $150. The $150 is net of expected doubtful debts of $50.
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