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Questions and Answers
IFRIC 23 became effective for annual reporting periods beginning on or after 1 January 2020.
IFRIC 23 became effective for annual reporting periods beginning on or after 1 January 2020.
False
The cumulative effect of applying IFRIC 23 is recognized in retained earnings at the start of the reporting period.
The cumulative effect of applying IFRIC 23 is recognized in retained earnings at the start of the reporting period.
True
An entity must adjust comparative information when first applying the new requirements of IFRIC 23.
An entity must adjust comparative information when first applying the new requirements of IFRIC 23.
False
Full retrospective application of IFRIC 23 is allowed if an entity does not use hindsight.
Full retrospective application of IFRIC 23 is allowed if an entity does not use hindsight.
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Entities are not required to reassess judgments and estimates when facts and circumstances change.
Entities are not required to reassess judgments and estimates when facts and circumstances change.
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IFRIC 23 was issued on 7 June 2017 and is effective for annual periods beginning on or after 1 January 2020.
IFRIC 23 was issued on 7 June 2017 and is effective for annual periods beginning on or after 1 January 2020.
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An entity is required to consider tax treatments collectively under IFRIC 23 without exception.
An entity is required to consider tax treatments collectively under IFRIC 23 without exception.
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When evaluating tax treatments, an entity must assume that a taxation authority lacks full knowledge of all relevant information.
When evaluating tax treatments, an entity must assume that a taxation authority lacks full knowledge of all relevant information.
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The consensus under IFRIC 23 is that tax treatments may be assessed together if it provides a better prediction of the resolution of uncertainty.
The consensus under IFRIC 23 is that tax treatments may be assessed together if it provides a better prediction of the resolution of uncertainty.
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In cases where a tax treatment is probable to be accepted, the entity must determine tax-related items consistently with the treatment used in its income tax filings.
In cases where a tax treatment is probable to be accepted, the entity must determine tax-related items consistently with the treatment used in its income tax filings.
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IFRIC 23 exclusively provides guidance for determining the revenue recognition of tax credits.
IFRIC 23 exclusively provides guidance for determining the revenue recognition of tax credits.
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An entity must use the expected value method for tax treatment determinations only when it concludes that a treatment is not probable to be accepted.
An entity must use the expected value method for tax treatment determinations only when it concludes that a treatment is not probable to be accepted.
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IAS 12 is irrelevant to the application of IFRIC 23 as it deals with a different area of accounting.
IAS 12 is irrelevant to the application of IFRIC 23 as it deals with a different area of accounting.
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Study Notes
IFRIC 23: Uncertainty over Income Tax Treatments
- Issuance Date: June 7, 2017, effective for annual periods beginning on or after January 1, 2019. Earlier application permitted.
- Objective: Clarifies accounting for uncertainties in income taxes under IAS 12.
- Scope: Applies to determining taxable profit (or loss), tax bases, unused tax losses/credits, and tax rates when uncertainty exists regarding income tax treatments.
- Key Consideration: Entities must determine whether to consider tax treatments independently or collectively. The chosen approach should best predict the uncertainty's resolution.
- Tax Authority Assumption: Entities assume the tax authority will examine reported amounts, possessing full knowledge of all relevant information.
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Probability Assessment: For each tax treatment (or group), entities assess the probability of acceptance by the relevant authority.
- Probable Acceptance: Taxable profit, etc. are determined consistently with the tax treatment in the income tax filing.
- Not Probable Acceptance: The most likely amount or expected value of the tax treatment is used. The method yielding better uncertainty resolution prediction should be selected.
- Changes in Facts and Circumstances: Entities must reassess judgments and estimates if facts and circumstances change.
- Transition: The cumulative effect of initial application is recognized in retained earnings (or other appropriate equity components) at the start of the first reporting period of application. Comparative information is not adjusted. Full retrospective application is permitted if feasible without hindsight.
Related Standards and Interpretations
- IAS 1: Presentation of Financial Statements
- IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors
- IAS 10: Events after the Reporting Period
- IAS 12: Income Taxes
IFRIC 23 Timeline
- January 2014: Added to the Interpretations Committee's agenda.
- October 21, 2015: DI/2015/1 (Uncertainty over Income Tax Treatments) published.
- January 19, 2016: Comment deadline for DI/2015/1.
Related News
- October 22, 2019: ESMA announces enforcement priorities for 2019 financial statements.
- August 20, 2019: Comments on two IASB exposure drafts.
- October 24, 2018: European Union formally adopts IFRIC 23.
- November 6, 2017: Updated EFRAG endorsement status report.
- June 7, 2017: New Interpretation on uncertain income tax accounting issued.
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Description
Test your understanding of IFRIC 23 and its implications on accounting for uncertainties over income tax treatments. This quiz covers key concepts, the scope of the standard, and assessments regarding tax authorities. Enhance your knowledge of how to manage tax uncertainties effectively.
