Deffered Tax & Accrued Income

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Krishna (Querist)
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24 September 2010 Dear sir,,

Kindly share the details with definition in brief for Deffered Tax & Accured Income and which side we have to put it in Balance Sheet ??

Thanks
Krishna

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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24 September 2010
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 from current assets and current liabilities 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.

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CA Manoj Kumar Rai

CA Manoj Kumar Rai (Expert)
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25 September 2010 Dear krishna,

Accrued income should be Shown in Current assets in balance Sheet.
Accrued income means the income earned but not due at balance sheet date.
Mr.Chackrapani has nicely interpreted Deferred tax.
Thanks;
CA manoj kumar rai

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