A Company incorporated in the year 2005. company has only computers costing to Rs. 5,00,000/- under the head Fixed assets. from 2005 to till date company has not purchased any new assets. up to the year ended 31.03.2008 the company was creating Deferred Tax Liability as the depreciation is more is Income Tax and less in Company Books. accordingly, till 31.03.2008 company's books shows a deferred tax liability of Rs. 88,000/- (Aprox.) now first time, for the y/e 31.03.2009 Income Tax Deprn is less than companies Act, accordingly i have calculated the defered tax as follows:-
Deprn (Companies Act) 25,000
Depn (Income Tax) 10,000
difference 10,000
Hence, D Tax Asset @ 30.90% 3,090
Now my question is,
I have a D T Liability of Rs. 88,000 (Approx) in that account. what will the entry for Current Year D T Asset of Rs. 3,090/-?
According to me, I should Debit Deferred Tax Account & Credit Profit & Loss A/c for Rs. 3090/-. And the final balance that would appear in the Deffered Tax Liability in Balance Sheet as on 31.03.2009 will be Rs. 84910/- (i.e Rs. 88,000 - Rs. 3090)
Am I Right?
CAclubindia
