The distinction between current and non-current assets and liabilities used in the presentation of financial statements has been challenged for well over the past two decades. Despite this, the distiction is still used today and appears to still have relevance. The purpose of this study is to evaluate and determine the most appropriate method of classification of deferred tax between current and non-current in the context of the objective of financial statements. This is important as information that meets the objective of financial statements is useful to users of financial statements, and might influence their economic decisions. Furthermore, the most appropriate method of classification will have a direct impact on working capital ratios as well as other ratios in financial reporting analyses. A literature review of technical issues together with insights collected from accounting lecturers and technical partners and/or directors by way of a descriptive survey have shown that the destinction of deferred tax assets and liabilities between current and non-current assets and liabilities meets the objective of financial statements. This is in terms of both the current IASB Framework as well as the proposed revised Conceptual Framework. Standard setters in the accounting arena should therefore consider the value such a distinction would add to users of financial statements. This distinction will have the biggest impact on preparers of financial statements, as information of sufficient detail would have to be readily available to enable them to provide users with more relevant information. Copyright
Dissertation (MCom)--University of Pretoria, 2008.