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CA Final · Financial Reporting · Ind AS 12 Income Taxes

Sagar Realty Ltd, an Ind AS reporter, holds a building as investment property. Under Ind AS 40, only the cost model is allowed, and the fair value model is not permitted. A trainee asks what this means for the deferred tax paragraphs on investment property measured at fair value in IAS 12. Which statement is correct per the Ind AS 12 text?

Because Ind AS 40 does not permit the fair value model, Ind AS 12 deletes paragraphs 51C-51D, and it modifies paragraphs 20 and 51E as a consequence. So the IAS 12 presumption rules for fair-valued investment property do not appear in Ind AS 12.

  1. AParagraphs 51C-51D are retained unchanged and apply to all investment property
  2. BParagraphs 51C-51D are deleted, and paragraphs 20 and 51E are modified as a consequenceCorrect
  3. COnly paragraph 61 is deleted, and nothing else changes
  4. DParagraphs 51C-51D are retained, and only paragraph 68(a) is modified

Explanation

The comparison with IAS 12 states that because Ind AS 40 does not allow the fair value model, paragraphs 51C-51D are deleted. Paragraphs 20 and 51E are modified as a consequence. The other options misstate which paragraphs are affected.

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