Carry forward of Deferred Tax Assets & Liablilities
This query is : Open
11 August 2020
Hi all!
The following is the doubt I have:
DTA as on 31.03.2019: Rs. 16.85
Depreciation for FY 2019-20:
As per Accounting: Rs. 1266.61
As per Income Tax: Rs. 495.71
Going by the depreciation route, the DTA is Rs. 200.44 [(1266.61-495.71)*26%]
WDV as on 31.03.2020:
As per Accounting: Rs. 3625.68
As per Income Tax: Rs. 4461.39
Going by the WDV route, the DTA comes to Rs. 217.29 [(4461.39-3625.68)*26%]
Now, my doubt here is, Which of the below entries is correct?
DTA A/c Dr. 200.44
To P&L A/c 200.44
(Here the net effect is Closing DTA is Rs. 217.29 [200.44+16.85] - same as that arrived at by WDV route)
(or)
DTA A/c Dr 183.59
To P&L A/c 183.59
(Here the net effect is keeping Closing DTA as 200.44 and creating DTA for the difference [200.44-16.85])
I tried to read various articles and also tried to read & understand AS-22 but I could not get this.
Please guide me...
And also, it is really appreciated if you could point me to the exact source/guideline/paragraph, etc. on which your answer is based ( I ask this because I could not find the source and I want to gain knowledge, no other intention)
Thanks in advance...
The following is the doubt I have:
DTA as on 31.03.2019: Rs. 16.85
Depreciation for FY 2019-20:
As per Accounting: Rs. 1266.61
As per Income Tax: Rs. 495.71
Going by the depreciation route, the DTA is Rs. 200.44 [(1266.61-495.71)*26%]
WDV as on 31.03.2020:
As per Accounting: Rs. 3625.68
As per Income Tax: Rs. 4461.39
Going by the WDV route, the DTA comes to Rs. 217.29 [(4461.39-3625.68)*26%]
Now, my doubt here is, Which of the below entries is correct?
DTA A/c Dr. 200.44
To P&L A/c 200.44
(Here the net effect is Closing DTA is Rs. 217.29 [200.44+16.85] - same as that arrived at by WDV route)
(or)
DTA A/c Dr 183.59
To P&L A/c 183.59
(Here the net effect is keeping Closing DTA as 200.44 and creating DTA for the difference [200.44-16.85])
I tried to read various articles and also tried to read & understand AS-22 but I could not get this.
Please guide me...
And also, it is really appreciated if you could point me to the exact source/guideline/paragraph, etc. on which your answer is based ( I ask this because I could not find the source and I want to gain knowledge, no other intention)
Thanks in advance...
11 August 2020
First Entry is Correct.
12 August 2020
Both the methods are correct. You can create a hypothetical example with 3-4 assets and calculate depreciation as per books and as per income tax. Then find DIffered Tax for all the year. The net effect will be the same at the end of 5th Year.
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