Recognition of an impairment loss creates a deferred tax asset
An entity has an asset with a carrying amount of €2,000 whose recoverable amount is €1300. The tax rate is 30% and the tax base of the asset is €1,500. Impairment losses are not deductible for tax purposes. The effect of the impairment loss is as follows:
| Before impairment | Effect of mpairment € | After impairment | |
| Carrying amount | 2,000 | (700) | 1,300 |
| lax base | 1,500 | 1,500 | |
| Taxable (deductible) temporary difference | 500 | (700) | (200) |
| Deferred tax liability (asset) at 30% | 150 | (210) | (60) |
The entity will recognise the deferred tax asset to the extent that the respective recognition criteria of IAS 12 are met.
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