Český finanční a účetní časopis 2012(3):28-41 | DOI: 10.18267/j.cfuc.319

Deferred Tax Arising from Mergers and Divisions

Jana Skálová

Ing. Jana Skálová, Ph.D. - oborný asistent; Katedra finančního účetnictví a auditingu, Fakulta financí a účetnictví, Vysoká škola ekonomická v Praze, nám. W. Churchilla 4, 130 67 Praha 3; <jana.skalova@vse.cz>.

The article deals with the accounting view of deferred tax liabilities and deferred tax assets in companies that have carried out a merger or division. Temporary differences arise when the tax bases of the identifiable assets acquired and liabilities assumed are not affected by the business combination or are affected differently. For example, when the carrying amount of an asset is increased to fair value but the tax base of the asset remains at cost to the previous owner, a taxable temporary difference arises which results in a deferred tax liability The regulation of accounting for deferred tax in the Czech accounting legislation historically based on IAS 12. The Czech legislators, however, made implementation very briefly and inadequately. Czech rules does not give answers to many questions that arise in complex transactions, such as the revaluation of assets due to merger. The article discusses the first recognition of deferred tax, calculation method, the method of accounting, the procedure in the case of goodwill.

Keywords: Deferred tax liabilities; Deferred tax assets; Temporary differences; Tax base.

JEL classification: M41

Published: October 1, 2012  Show citation