when Deferred Tax Asset & Deferred tax liability arises?
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Answer / v.mohan
deferred tax means it is a timing difference between the
companies and income tax act.
Deferred tax liability arise when the It act Depreciation
higher than the companies act depreciation.
Deferred tax Asset arise when the It act Depreciation
lesser than the companies act depreciation.
| Is This Answer Correct ? | 837 Yes | 123 No |
Answer / shyam sharma
Deffered tax liability means currently you are paying less
amount of tax as per IT but in future you have to pay more
so for this timing difference we have to create a deffered
tax liability in our books of accounts accoding to the
virtual certainty that in future company will earn
sufficient proft to recover it.
for deffererd tax liability the entry will be
Profit & loss a\c dr
To Deffered tax liability
| Is This Answer Correct ? | 339 Yes | 37 No |
Answer / ashish dash
Deductable Temporary difference give rise to Deffered Tax
Asset and Taxable Temporary difference give rise to
Deffered Tax Libility. There are certian expense and income
which are considered in FI but not in TI and Vice Versa.
This gives rise to Deffered Tax Asset and Libility. If your
Financial Income is more than your taxable income it gives
rise to Deffered Tax Libility and If your Taxable income is
more than your Financial income it gives rise to Deffered
Tax Asset. Deffered Tax asset(Debit) and Deffered tax
Libility(Credit) For e.g if income is rs400000 as per FI
and TI and depreciation is rs40000 as per FI and rs60000 as
per TI and Tax rate is 30% then entry is as follows:
Dr.Tax expense(400000-40000=360000*30%) Rs108000
Cr Tax Payable (400000-60000=340000*30%) Rs 102000
Cr Deffered Tax Libility Rs 6000
| Is This Answer Correct ? | 189 Yes | 32 No |
Answer / anshul gupta
Prior to AS-22 the amount of income tax payable is
determined on the profit and loss account as per income tax
laws. after the introdution of AS-22 it is determined on
the basis of Accrual concept . according to this concept
tax expense is accounted in the period in which
correspoonding revenues and expenses are recognised .
| Is This Answer Correct ? | 184 Yes | 87 No |
Answer / k.rakesh babu
as tax will be calculated as per provisions of income tax
we should calculate income as per TI and also FI so
deferred tax asset or liability will araise only if
differnces araise in calculation of depreciation and income
in case of Fi and Ti
| Is This Answer Correct ? | 60 Yes | 12 No |
Answer / sanket s jain
Deferred tax liability may arises due differences in many
concepts of IT Act & some other act(Co. Act). For eg: rates
of Depreciation in IT Act & Company Act is Different, so tax
liability may differ as per IT act or Co. Act. So difference
is treated as Deffered Tax Liability or Deferred Tax Assests
as the case may be
| Is This Answer Correct ? | 43 Yes | 8 No |
Answer / shimalibish
Deferred tax liability arise when the It act Depreciation
higher than the companies act depreciation.
Deferred tax Asset arise when the It act Depreciation
lesser than the companies act depreciation.
| Is This Answer Correct ? | 9 Yes | 1 No |
Answer / minnu
Deffered tax liability means currently you are paying less
amount of tax as per IT but in future you have to pay more
so for this timing difference we have to create a deffered
tax liability in our books of accounts accoding to the
virtual certainty that in future company will earn
sufficient proft to recover it.
for deffererd tax liability the entry will be
Profit & loss a\c dr
To Deffered tax liability
| Is This Answer Correct ? | 6 Yes | 0 No |
Answer / shah king
The general principle as per IAS 12 is that deferred tax
liabilities should be recognised for all taxable temporary
differences.The exceptions are:
liabilities arising from initial recognition of goodwill
for which amortisation is not deductible for tax purposes;
liabilities arising from the initial recognition of an
asset/liability other than in a business combination which,
at the time of the transaction, does not affect either the
accounting or the taxable profit; and
liabilities arising from undistributed profits from
investments where the entity is able to control the timing
of the reversal of the difference and it is probable that
the reversal will not occur in the foreseeable future
Recognition of Deferred Tax Assets
A deferred tax asset should be recognised for deductible
temporary differences, unused tax losses and unused tax
credits to the extent that it is probable that taxable
profit will be available against which the deductible
temporary differences can be utilised, unless the deferred
tax asset arises from:
the initial recognition of an asset or liability other than
in a business combination which, at the time of the
transaction, does not affect the accounting or the taxable
profit.
Deferred tax assets for deductible temporary differences
arising from investments in subsidiaries, associates,
branches and joint ventures should be recognised to the
extent that it is probable that the temporary difference
will reverse in the foreseeable future and that taxable
profit will be available against which the temporary
difference will be utilised.
The carrying amount of deferred tax assets should be
reviewed at the end of each reporting period and reduced to
the extent that it is no longer probable that sufficient
taxable profit will be available to allow the benefit of
part or all of that deferred tax asset to be utilised. Any
such reduction should be subsequently reversed to the
extent that it becomes probable that sufficient taxable
profit will be available.
A deferred tax asset should be recognised for an unused tax
loss carryforward or unused tax credit if, and only if, it
is considered probable that there will be sufficient future
taxable profit against which the loss or credit
carryforwards can be utilised.
| Is This Answer Correct ? | 5 Yes | 1 No |
Answer / shabz
hi all,,
appreciate the support u all extend to us in getting these
concepts. But what i have noted in all the examples above
is that, everytime Depreciation has been taken as an
example. Can u explain it with ana ngle of liabilty, say
Provision for doubtful debts or make it simple lets say for
liability.
| Is This Answer Correct ? | 3 Yes | 0 No |
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0 Answers Ernst Young, Thomson Reuters,
assume we have taken a assest on 20/02/2010,then can we charge depreciation for a whole finacial year?
Audit 
