Deferred tax

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Chirantan (Querist)
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08 August 2011 My client has not provided for DT, this will be the first time applicability of AS22. For the current year there is DTL, and for the prior years for which no provision of DT was made, there is DTA. DT is arising only due to depreciation and no other item. As per AS22 on the first time applicability DTA/DTL should be charged or credited to revenue reserve. My question is how would you treat the DTA in the above case. Where do we show it? How do we disclose it? The company has substantial General reserve and PL balance. Thanks in advance for your help.

Chirantan

Chirantan (Querist)
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09 August 2011 Since none responded to this query i tried to resolve it by myself as self help is best help. The accumulated DTA can be set off with the DTL and the balance should appear at the face of the PL and Balance Sheet. The details should be disclosed in the notes to accounts.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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09 August 2011 Providing DTL does not affect your tax liability for the current year or previous years. Now you can do the following
1) For Previous years deduct it from Reserves & Surplus and put a note to the accounts
2) For Current Year provide in the P & L a/c

Chirantan

Chirantan (Querist)
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09 August 2011 For Previous years it was DTA, so it will have to be summed up with R&S. R & S is nothing but PL balance in my case. so what i am doing is setting of DTA accumulated with DTL current year. The net figure is being shown in the P&L. Keeping DTA requires reasonable certainty. is my approach correct?

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