As 22 accounting for income tax
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
25 November 2015
Hello,
I want to understand the concept of accounting for income tax and what is DTA & DTL and why we create a Valuation allowance with example
I want to understand the concept of accounting for income tax and what is DTA & DTL and why we create a Valuation allowance with example
25 November 2015
1.Source:- AS-22 deals with deferred tax.
2.Focus:- It is based on the matching concept.
3.Reason:- Accounting income and taxable income may differ on account of various reasons.
4.Measurement:- The difference as aforesaid is itemized and permanent differences are eliminated. The rest is called timing difference.
5.Timing difference:- Those differences which lead to either saving in tax or payment of tax in the current year in the manner that such saving or payment is nullified in later years.
6.Recognition:- Deferred tax should be recognized for all timing differences subject to consideration of prudence in respect of deferred tax assets.
7.Rates:- Deferred tax is to be recognized using the tax rates that have been enacted on the balance sheet date. If not enacted can be measured on the tax laws that have been substantially enacted as on the b/s date.
8. Positioning:- deferred tax asset / liability should be disclosed separately in non- current assets and non- current liabilities respectively in the b/s.
9.Disclosure:- In the notes on accounts compliance of AS 22 may be mentioned as well as the workings of the deferred tax may be given.
1.Source:- AS-22 deals with deferred tax.
2.Focus:- It is based on the matching concept.
3.Reason:- Accounting income and taxable income may differ on account of various reasons.
4.Measurement:- The difference as aforesaid is itemized and permanent differences are eliminated. The rest is called timing difference.
5.Timing difference:- Those differences which lead to either saving in tax or payment of tax in the current year in the manner that such saving or payment is nullified in later years.
6.Recognition:- Deferred tax should be recognized for all timing differences subject to consideration of prudence in respect of deferred tax assets.
7.Rates:- Deferred tax is to be recognized using the tax rates that have been enacted on the balance sheet date. If not enacted can be measured on the tax laws that have been substantially enacted as on the b/s date.
8. Positioning:- deferred tax asset / liability should be disclosed separately in non- current assets and non- current liabilities respectively in the b/s.
9.Disclosure:- In the notes on accounts compliance of AS 22 may be mentioned as well as the workings of the deferred tax may be given.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Oct 2025 Invoices
- Under marginal scheme
- Import of Software Service.
- Clarification Requested: Gift → NRO → NRE → Overseas Transfer - USA/CANDA (FEMA & Tax Compliance)
- GST on Renting godown to KFCSC for Storage of Raagi
- How to Handle Active E-Invoices in GST Portal Deleted from Tally?
- IMPORT PURCHASE ENTRY PASSED IN BOOKS OF ACCOUNT
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Goods sold but invoice not issued
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
