AASB 1 First-time Adoption of Australian Accounting Standards B14: Deferred tax on leases and decommissioning: despite the AASB 112 initial recognition exemption, recognise deferred tax at the transition date for right-of-use assets, lease liabilities, decommissioning liabilities and the related asset components, with the cumulative effect in equity

What does B14 require?

The AASB 112 initial recognition exemption (its paragraphs 15 and 24) does not shield transition-date balances arising from leases and decommissioning, restoration and similar obligations. At the transition date the entity recognises deferred tax for every temporary difference, deductible or taxable, on lease liabilities and their right-of-use assets, and on decommissioning or similar liabilities together with the matching amounts capitalised into the related asset; the deferred tax asset is limited to the probable taxable profit. The cumulative effect is recognised in retained earnings or another equity component at that date.