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Due to flood crisis, many businesses are facing numerous challenges in many of its areas of business. One of the main problems due to the flood may come from loss of machineries and factories that are worth over multimillions. Many new rules and regulations are being implemented by the government in order to soften the impact of the floods.

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Softt Wongsunopparat
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20 views1 page

Assignment 1

Due to flood crisis, many businesses are facing numerous challenges in many of its areas of business. One of the main problems due to the flood may come from loss of machineries and factories that are worth over multimillions. Many new rules and regulations are being implemented by the government in order to soften the impact of the floods.

Uploaded by

Softt Wongsunopparat
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Assignment # 1

What are the accounting & taxation problems that arise from flood crisis? How to solve?
Due to the flood crisis, many businesses are facing numerous challenges in many of its areas of business such as operation, manufacturing, in which accounting and taxation is also one of the many challenges. One of the main problems due to the flood may come from loss of machineries and factories that are worth over multimillions. Most of these machines are destroyed by the flood to the point that they cannot be repaired. Therefore, these assets are no longer can be used which needs to be written-off from the statement of financial position. However, due to the huge amount of the written-off of the machineries, this leads to enormous impairment expense during the year, which will in turn leads to the decrease in the profit of the year. Still, impairment testing must be done before the company can recognize the impairment of assets. Moreover, TAS 16 Property, Plant and Equipment states that items of PPE are derecognized (i.e. removed from the accounts) when there are no future economic benefits expected from their use or disposal. Therefore, if an item of PPE has been damaged to the extent that it can no longer be used and is irreparable, the item of PPE should be derecognized immediately. Problems also arise for taxation aspects, during the flood crisis the sales revenue of businesses that are affected by the flood. By having less sales revenue and tremendous loss, companies are having concerns whether they still need to pay corporate income tax or not. According to the Thai Revenue Department, for companies receiving claims from an insurance company, there is a corporate income tax exemption on the claims received from the insurance company which represent the compensation for losses incurred that exceeds the cost of the asset after any deduction for wear and tear and depreciation. In addition, a Valued Added Tax exemption is provided to the donor for property donated through another entity as well. Many new rules and regulations (including exemption) are being implemented by the government in order to soften the impact of the floods, such as tax deduction for the donors of the flood, the reduction of the corporate income tax, the recognition of the impairment of assets from the flood, and many more.

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