22 December 2007
Deferred Tax has wide financial implications. One has to look at it from a long term view. It also substantiates that the value of assets that the entity is representing is proper and is recoverable and hence further tax liability will arise due to conditions existing on the Balance Sheet Date. It gives the investors a true picture of tax liability on the basis of the conditions exisitng as at the Balance Sheet Date and not just the short-term cash outflow on account of taxes payable to taxation authorities.
22 December 2007
Further the tax implication gets adjusted in the coming years with this deferred tax.. however the supreme court has questioned this.. what so ever the concept of deferred tax is very logical..
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