Deferred Tax Asset and Liability explanation

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41 Points Posted on 27 April 2021

According to definition, if Current Tax > Tax Expenses, then it is called Deffered Tax Assets

and if Current Tax < Tax Expenses, then it is called Deferred Tax Liability

So, how if Current Tax is more than Tax Expenses it is called an 'Assets'

and how if Current Tax is less than Tax Expenses it is called a 'Liability'

Please explain...

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On 27 April 2021 at 19:55 Report
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Chartered Accountant
24588 Points Posted on 27 April 2021
Deferred tax assets is current assets and deferred tax liability is current liabilities but entity should show the net balance of DTA and DTL in balance sheet
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On 27 April 2021 at 21:08
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3924 Points Posted on 27 April 2021
When Income Tax libility as per book's of Accounts is more than Income Tax act due to i.e rate of depreciation , then for temporary difference we have to create Deferred Tax liability .
when Income Tax libility as per book's of Accounts is less than Income Tax act due i.e rate of depreciation , then for temporary difference we have to create Deferred Tax Asset.
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On 27 April 2021 at 22:30

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