An entity is required to disclose, in respect of each type of temporary difference, the amount
of deferred tax assets and liabilities recognised in the statement of financial position. FRSs are
unclear as to what constitutes a type of a temporary difference. Disclosures presented in
these illustrative financial statements are based on the statement of financial position captions
related to the temporary differences. Another possible interpretation is to present disclosures
based on the reason for the temporary difference, e.g., depreciation.
In our view, it is not appropriate to disclose gross deductible temporary differences with the
related valuation allowance shown separately because, under FRSs, it is temporary
differences for which deferred tax is recognised that are required to be disclosed.
These issues are discussed in our publication Insights into IFRS (3.13.1000.40 - 50).
2. FRS 12.82 An entity discloses the nature of the evidence supporting the recognition of a deferred tax
asset when:
utilisation of the deferred tax asset is dependent on future taxable profits in excess of the
profits arising from the reversal of existing taxable temporary differences; and the entity has suffered a loss in either the current or preceding period in the tax
jurisdiction to which the deferred tax asset relates.