rick schreef:
Dear Arif,
...
I have a short question about the fact that the deferred tax asset with respect to the unrelieved trading losses has been valued at zero. (as at 31-12-2007)
The IFRS said that the deferred tax asset shall be recognised when it is probable that future taxable profit will be available. I mean that the carryforward of the unused tax losses can be deducted unrestricted (with respect to years). But I am not sure.
Does this fact mean that the management of Sopheon doesn't believe in the future (inclusive of tax profits) of Sopheon? (in spite of the uncertainty as to the timing of taxable profits). If the management believes in the future of Sopheon, why isn't a part of this potentially asset taken on the balance sheet?
In my opinion would Sopheon, with current growt rates get profit in the nearly future. But what is the reasoning of the management of Sopheon about to value the deferred tax asset at zero?
I look foward to receiving your reply!
thanking you in advance,
regards,
En het antwoord van Arif hierop:
Arif schreef:
Hello Rick,
...
Regarding the deferred tax asset, there are practical issues to take into account:
- the auditors cannot rely on management confidence in future profitability (although I can assure you such confidence exists!). Application of the accounting standard requires the company to show a track record of profitability, and then high probability that it will continue to arise in the future.
- even if the principle of creating a tax asset was agreed, it is impossible to value with any accuracy unless the profit stream was very predictable both as to time and amount; so it is likely that just a few years of profit expectation would qualify, and then only after risk factors were applied. Accordingly, the effect might not be that substantial.
More broadly, I would question whether crystallizing the tax asset would demonstrate much in terms of operational progress!
I hope this was useful and thank you for your support and interest in Sopheon.
Kind regards
Arif