Current tax payable: reconcile the bill separately from tax expense
Current tax expense, total tax expense, cash paid and the closing tax payable answer different questions. A period-by-period rollforward connects them.
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Keep the books in order, plan for cash needs and understand reporting changes. Practical guides with worked examples and links to the evidence.
Accounting and finance blog
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Deferred customer payments: separate revenue from financing
A deferred selling price can include interest. Assess the financing purpose and exceptions, then separate the cash selling price from interest over the payment period.
Foreign-currency advances: keep a rate for each prepayment
A buyer can recognise one purchase using several exchange rates. Keep each non-monetary advance at its own rate and separate the unpaid monetary balance.
Going concern after year end: when the accounting basis must change
A funding failure before accounts are authorised can change the basis of preparation. Distinguish material uncertainty from having no realistic alternative to closure.
Held for sale: date the criteria before stopping depreciation
A sale intention does not stop depreciation. Establish when all IFRS 5 criteria are met, then compare carrying amount with fair value less costs to sell.
Intangible useful lives: the contract term can be longer than the useful life
A ten-year licence may support only six years of economic use. Decide the life, the availability date and the annual review before calculating amortisation.
Investment property: separate rental use from your own operations
Classify a mixed-use building from its use and whether the portions can be separated. Rental income alone does not put the whole property under IAS 40.
Lease measurement: why the liability and right-of-use asset differ
Measure the unpaid lease payments first, then reconcile prepaid rent, incentives and qualifying direct costs to the right-of-use asset. Keep the two schedules separate.
Major inspections: replace the old component when you capitalise the new one
Capitalising a qualifying major inspection also requires removing the previous inspection component. Routine servicing and a future inspection budget follow different rules.
Restoration obligations: asset cost, provision and the cost of time
A qualifying restoration obligation can add to plant cost at present value. Separate the finance cost of time passing from a later change in the estimate.
Cash equivalents: test a deposit when you acquire it
Two deposits mature on the same day but can belong in different cash-flow totals. Acquisition date, purpose and risk matter, as do the overdraft terms.
Contract modifications: when a new order changes the remaining revenue
An approved contract change can create a separate contract, change future revenue or require a catch-up. Work through the distinctness and pricing tests.