Document ID: chunk:federal_register_of_legislation:F2023C00180:front:0:p51
Version: federal_register_of_legislation:F2023C00180
Segment Type: other
Provision Reference: 
Character Range: 135672–140269

184(c)                                                                      0.24719     45
20Y2                                                                                                               (67%)                                      61(c)                                                                       0.21494     13
Value in use                                                                                                                                                                                                                                          1,360

  (a) The present value factor is calculated as k = 1/(1+a)n, where a = discount rate and n = period of discount.
  (b) Based on management's best estimate of net cash flow projections (after the 40% cut).
  (c) Based on an extrapolation from preceding year cash flow using declining growth rates.

Schedule 3. Calculation and allocation of the impairment loss for the Country A cash-generating unit at the beginning of 20X2

Beginning of 20X2                      Goodwill  Identifiable assets  Total

                                       CU                             CU        CU

Historical cost                        1,000                          2,000     3,000
Accumulated depreciation (20X1)        –                              (167)     (167)
Carrying amount                        1,000                          1,833     2,833
Impairment loss                        (1,000)                        (473)     (1,473)
Carrying amount after impairment loss  –                              1,360     1,360

Example 3 Deferred tax effects
Use the data for entity T as presented in Example 2, with supplementary information as provided in this example.

A  Deferred tax effects of the recognition of an impairment loss
IE33 At the beginning of 20X2, the tax base of the identifiable assets of the Country A cash-generating unit is CU900. Impairment losses are not deductible for tax purposes. The tax rate is 40 per cent.
IE34 The recognition of an impairment loss on the assets of the Country A cash-generating unit reduces the taxable temporary difference related to those assets. The deferred tax liability is reduced accordingly.

Beginning of 20X2              Identifiable assets before impairment loss  Impairment loss  Identifiable assets after impairment loss

                               CU                                                           CU                                            CU

Carrying amount (Example 2)    1,833                                                        (473)                                         1,360
Tax base                       900                                                          –                                             900
Taxable temporary difference   933                                                          (473)                                         460
Deferred tax liability at 40%  373                                                          (189)                                         184

IE35 In accordance with AASB 112 Income Taxes, no deferred tax relating to the goodwill was recognised initially. Therefore, the impairment loss relating to the goodwill does not give rise to a deferred tax adjustment.

B  Recognition of an impairment loss creates a deferred tax asset
IE36 An entity has an identifiable asset with a carrying amount of CU1,000. Its recoverable amount is CU650. The tax rate is 30 per cent and the tax base of the asset is CU800. Impairment losses are not deductible for tax purposes. The effect of the impairment loss is as follows:

                                           Before impairment  Effect of impairment  After impairment

                                           CU                                       CU                   CU

Carrying amount                            1,000                                    (350)                650
Tax base                                   800                                      –                    800
Taxable (deductible) temporary difference  200                                      (350)                (150)
Deferred tax liability (asset) at 30%      60                                       (105)                (45)

IE37 In accordance with AASB 112, the entity recognises the deferred tax asset to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised.

Example 4 Reversal of an impairment loss
Use the data for entity T