Valuing deferred tax assets

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Valuing deferred tax assets – Judgement! Judgement! Judgement! Judgement! Judgement! Judgement! Judgement! Judgement! OK?

The telecommunications industry is very dynamic, driven by technological developments and changes in the competitive and regulatory environment. Due to the significant capital expenditure involved in building infrastructure, investment recovery periods tend to be longer than in many other industries. In the past, a number of telecom operators have recorded significant start-up trading losses and losses due to impairment charges on licences or goodwill and other assets resulting from business combinations. Depending on local tax legislation, operators can use these losses to offset future taxable income.

Companies are required to assess the accumulated losses and the recoverability of any related deferred tax assets Read more

Identify Telecom industry performance obligations

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This is an example in a small series for illustrating the concepts in What is a good or service that is distinct?

Example one:

A telecoms company enters into a contract for the sale of a mobile device and connection to its mobile network. The contract, which lasts for two years, gives the customer:

  • X minutes of calls per month; Identify Telecom industry performance obligations
  • Y gigabytes of data per month; and Identify Telecom industry performance obligations
  • Z texts per month. Identify Telecom industry performance obligations

The telecoms company frequently sells mobile devices without connecting them to the network. Although different combinations of minute, data and texts are available, it is not possible to buy only minutes, … Read more