Question
What are the deferred tax implications of carrying nondepreciable assets at valuation?

Answer
There is an interpretation summary that deals with this issue - SIC 21 ‘Income Taxes - Recovery of Revalued Nondepreciable Assets’.  Essentially this SIC deals with land which has an indefinite lifespan and thus it follows that the carrying amount is considered irrecoverable through usage.  As such SIC 21 says that the deferred tax liability or asset arising due to revaluation is measured based on the tax implications of the sale rather than through use (for example via a capital gain).  This could result in the use of a tax rate which relates to capital profits rather than the rate which is applicable to the entity’s pre-tax earnings.