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Goodwill deferred Tax

Goodwill deferred Tax

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We recognized goodwill in 2007 for a business combination. The Goodwill has been fully amortised from an accounting perspective (Carrying value). 

Our tax advisor makes a one sided adjustment in our tax computation and take an allowance for goodwill. As a note to the tax return it states there is a remaining Goodwill balance to be claimed.

Should I recognize a DTA for this Goodwill balance in our financial statements?

 

Replies (5)

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Psycho
By Wilson Philips
20th Jan 2021 10:56

I vote no

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By johngroganjga
20th Jan 2021 11:08

Why have you not been doing so far? What has changed to cause you to ask whether you should now start doing so 14 years later?

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Replying to johngroganjga:
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By accountingdude
20th Jan 2021 11:25

I recently joined. I would think a DTA should have been recognized for this goodwill? I dont understand why it hasnt.

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Replying to accountingdude:
Psycho
By Wilson Philips
20th Jan 2021 11:45

One doesn't normally recognise deferred tax assets, although I agree that in principle an asset of this nature could be recognised given that is probable that it will be recovered in future periods. The question you have to ask yourself is - is it material?

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By paul.benny
20th Jan 2021 14:29

At the time of your transaction, FRS19 was in force. This explicitly excluded recognition of deferred tax on goodwill.

FRS102 isn't as direct; however section 19, business combinations requires deferred tax to be calculated in accordance with section 29, tax, which excludes goodwill.

So no deferred tax asset because it's not permitted.

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