![]() ![]() Given that DTAs and DTLs are accounting concepts, what does it mean to say that offsetting is permitted by the relevant taxation authority? The test applied in certain jurisdictions to assess whether a DTA is realisable over a one year period is not applicable under Basel III. Regarding the deduction of DTAs, is it correct that DTAs resulting from net operating losses are not subject to the 10% threshold? Is it correct that the current test in some jurisdictions to check whether DTAs are realisable within one year is not applicable under Basel III?Īll DTAs that depend on the future profitability of the bank to be realised and that arise from net operating losses are required to be deducted from Common Equity Tier 1 in full and so do not benefit from the 10% threshold. The DTLs permitted to be netted against DTAs must exclude amounts that have been netted against the deduction of goodwill, intangibles and defined benefit pension assets, and must be allocated on a pro rata basis between DTAs subject to the threshold deduction treatment and DTAs that are to be deducted in full. All other such assets, eg those relating to operating losses, such as the carry forward of unused tax losses, or unused tax credits, are to be deducted in full net of deferred tax liabilities as described above. ![]() Where these DTAs relate to temporary differences (eg allowance for credit losses) the amount to be deducted is set out in CAP30.32 to CAP30.34. DTAs may be netted with associated DTLs only if the DTAs and DTLs relate to taxes levied by the same taxation authority and offsetting is permitted by the relevant taxation authority. Is the lessee's recognised asset under the new lease accounting standards (the right-of-use, or ROU, asset) an asset that is tangible or intangible?įor regulatory capital purposes, an ROU asset should not be deducted from regulatory capital so long as the underlying asset being leased is a tangible asset.ĭeferred tax assets (DTAs) that rely on future profitability of the bank to be realised are to be deducted in the calculation of Common Equity Tier 1. Most intangible assets are deducted from regulatory capital, while tangible assets generally are not. In accordance with applicable accounting standards, this goodwill amount may be adjusted for any subsequent impairment losses and reversal of impairment losses that can be assigned to the initial goodwill amount. In line with CAP30.7 a firm should calculate a goodwill amount as at the acquisition date by separating any excess of the acquisition cost over the investor’s share of the net fair value of the identifiable assets and liabilities of the banking, financial or insurance entity. Under the equity method, the carrying amount of the investment includes any goodwill. ![]() ![]() Must goodwill included in the valuation of significant investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation and accounted for using the equity method also be deducted? ![]()
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