Dta &dtl
This query is : Resolved
09 November 2011
Please explain Deffered tax Assets & Deffered tax liabilities.
CMA Ramesh Krishnan
(Expert)
15 November 2011
deferred tax liability or a deferred tax asset
on account of timing differences between an allowance for tax purposes and its
debit in company’s P&L account.
To illustrate, if tax depreciation is higher than the book depreciation, then the
tax impact of the difference between the two needs to be reflected in those
years by debiting the P&L account and crediting the ‘deferred tax liability’
account. The same gets reversed in the subsequent years when the tax
depreciation is lower than the book depreciation by accounting for such
difference as a deferred tax asset
in reverse case you can call it as deferred tax liability
on account of timing differences between an allowance for tax purposes and its
debit in company’s P&L account.
To illustrate, if tax depreciation is higher than the book depreciation, then the
tax impact of the difference between the two needs to be reflected in those
years by debiting the P&L account and crediting the ‘deferred tax liability’
account. The same gets reversed in the subsequent years when the tax
depreciation is lower than the book depreciation by accounting for such
difference as a deferred tax asset
in reverse case you can call it as deferred tax liability
19 November 2011
Thank you sir,please also explain in figure illustration for better understanding.Thank you
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