Home' Trinidad and Tobago Guardian : March 12th 2017 Contents A20 letters on sunday
guardian.co.tt Sunday, March 12, 2017
When a liability becomes an asset
Our engineer Finance Minister, Colm
Imbert, ignited a firestorm when
he accused the last government of
attempting to hide the losses of Petrotrin,
which are really some $4.2billion (TT)
between 2011 and 2016, since to him
it should have been explicitly shown
in Petrotrin’s books. This brought an
immediate response, condemnation, from
the big guns of the current Opposition
who claim that indeed there is this loss as
the minister claims.
However, according to accepted
accounting practise, if the company is in
a position to make a profit in the future,
this loss can then be used to offset its
future tax burden. Hence, by the stroke
of the accountant’s pen this accrued loss
disappears from or is not recorded on the
profit and loss statement and appears
on the balance sheet as an ‘asset’; as a
deferred tax asset.
The accounting literature indeed talks
about such a deferred asset, eg, a capital
allowance, which appears on the balance
sheet to offset future taxes.
This being so, the defenders of
Petrotrin’s accounts see the minister’s
accusation as challenging the integrity
of the accounting firm and possibly an
ulterior move meant to result in the
privatisation of Petrotrin. Let us ignore
for a moment the conventions of the
accounting profession and look at the
If a company loses money in a particular
year then it had to fund this loss by
something; debt, overdraft or even its
own resources or whatever. Hence the
company would have incurred a capital
liability because of the loss.
The tax laws of this land allow a
company to relate its poor performance in
one year to its tax requirement in future
years if it has made a loss. In other words,
the tax burden on a company can span its
aggregate performance over one or more
years if losses have been incurred.
What the accountants attempt to do is
to record on the balance sheet the losses
accrued that can be used in future years to
offset taxes if and when profits are made.
This record they call a deferred tax asset
(may as well have called it accrued losses
or an elephant—what is in a name).
Still these deferred tax assets cannot
be seen in the same light as plant
and equipment (tangible assets) or
intellectual property assets. The Dodd
Frank Regulations in the USA after 2009
frowned on practices such as these.
In this way, the balance sheets of
consecutive years are linked via the
deferred tax asset as to the accrued
losses or capital allowances that can be
carried across the years for tax purposes.
But what is real is that the company
lost money in a particular year or years
and this cannot be transformed into
a traditional asset by the stroke of an
According to accounting practices, the
loss for a particular year appears on that
year’s profit and loss statement. However,
the accrued losses over the years, which
allow future tax relief, are indicated in the
deferred asset and also as capital liabilities
in the balance sheet.
The minister may not have been
concerned with these accounting
subtleties and was focusing on the
capital implications of the accrued debt/
losses of the company, which are of
acute importance to the shareholder, the
Mary K King
Moms for Literacy
women since 1992
This year as we celebrate International Women’s
Day 2017, we stand behind women who challenge
bias and inequality, campaign against violence,
champion women’s education and who forge the
advancement of women. We support the businesses,
organisations, and schools that are erected and
headed by women and whose very existence is a
sign of change.
The NGO Moms for Literacy recently celebrated
the graduation of 20 women from its Tutor Training
Programme through the kind sponsorship of The
JB Fernandes Memorial Trust II. The programme
gives participants the skills to teach children in
their homes, schools and communities to read. The
graduates are from various communities in Trinidad
and are now certified reading instructors. These
women underwent theoretical and practical training
under the programme director and coordinator, Ms
Gonzales and Mr Trevor Oliver, who ensured that
they adopted the ‘Moms Approach’ to teaching
Moms holds strongly the belief that “When you
educate a girl, you educate a nation” and mothers
being their children’s first teachers must be able to
read, write, and comprehend so that they can excel at
their role. Moms sees literacy for our young women
as ensuring a better quality of life for our children
because when girls are left without the skills of
reading, writing and comprehending, they are more
susceptible to a life of poverty, domestic violence,
early pregnancies, HIV and Aids and other social ills.
The organisation also hosts literacy awareness
conferences helping mothers to achieve higher levels
of literacy in their communities. Remedial reading
enhancement classes for children, workshops and
tutor training for parents and teachers are held
at the San Juan location. The organisation can be
contacted at 638-5440/638-6667 if you wish to
volunteer or enquire about these programmes.
Moms for Literacy Caribbean
Thumbs up for
We acknowledge the tremendous job done by
SWAT men and women in uniform under the blazing
sun and pouring rain at times to ensure the safety
of everyone taking part in the biggest and most
beautiful festival in the world, T&T Carnival.
SWAT’s own hard-working officers were
outstanding, over 500 extraordinary officers were
on duty as they worked alongside the State’s law
enforcement officers and contributed to making this
Carnival safer for all as they went beyond the call of
duty to get the job done.
Thanks for your commitment and dedication
which resulted in quick action to deter criminals
and prevent unlawful activity. With crime at an
epidemic level, we must continue to join forces.
SWAT vows to continue working with the State’s law
enforcement to keep our people safer as we try to rid
the country of criminal elements.
Let us remember those who lost their lives to
accidents and other violent incidents this year and
over the years. Let us stand together as a people for
what is right always, making compassion, patience,
and love our new watch words.
Congratulations on a job well done, SWAT
officers. Thank you for your invaluable contribution.
As MX Prime, Ultimate Rejects, Full Extreme soca
2017 Road March winner puts it, “we jammin still”.
Group chairman, SWAT Estate Police Limited
Kees Dieffenthaller, of KES the Band, peforms during Massy Trinidad All Stars victory celebration at the band’s panyard on Duke
Street, Port-of-Spain, on Friday night. All Stars celebrated their tenth victory in the National Panorama Large Band category playing
Ultimate Rejects’ Full Exteme which also went on to record the largest road march victory. PHOTO: ROBERTO CODALLO
ALL STAR CELEBRATION
Links Archive March 11, 2017 March 13th 2017 Navigation Previous Page Next Page