when Deferred Tax Asset & Deferred tax liability arises?
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Answer Posted / 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
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