Deferred tax assets

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Querist : Anonymous

Querist : Anonymous (Querist)

22 September 2012 Can any body assist me to compute deferred tax in the above problem.

Profit Before Tax and Depreciation- (650000)
Depreciation as per Income tax Act-125000
Depreciation as per Company Act-185000
Carry forward loss as per income tax-125000

Option I: future profit is certain.
Option II:- Future profit is uncertain.

what will be the answer if Depreciation as per income tax is carried forward due to insufficient profit and we are claiming depreciation as per company act. then how we can compute DTA on the above difference( ie Company Act minus Income Tax Act )since different in profits are not due to the change in depreciation rate.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

22 September 2012 For both the options create DTA on the timing difference of depreciation.

CA Lokesh Pokharna

CA Lokesh Pokharna (Expert)

22 September 2012 AS 22 distinguishes only on timing & permanent difference basis.
So assuming all are timing differences

now profit reduced by excess dep. 60000
& profit inflated by 125000
netting is inflated by 65000x30(tax rate assumed)= 19500 DTA need to be created.

if carry forward loss can't be set off (means assuming permanent diff.) than DTL would be 60000*30%= 18000

Querist : Anonymous

Querist : Anonymous (Querist)

22 September 2012 Sir still i am confused.

sir what will be your answer if Depreciation as per income tax is carried forward due to insufficient profit and we are claiming depreciation as per company act. then how we can compute DTA on the above difference( ie Company Act minus Income Tax Act )since different in profits are not due to the change in depreciation rate.

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