Calculation of Deffered Tax Liabilty or Asset : one particular year Tax on Differed Tax showing as Possitve balance (Tax on partiuclar amount @ 30.09%) how can we show in Balance sheet in Non-current laibility either Negative balance or Possitive balance. KINDLY ADVISE ME.
Regards,
UMA SHANKAR
Hyderabad
it is deferred tax liabilty or deferred tax asset?
Deffered Tax Liability means, When the net income of your company report of financial statement is larger than the taxable income it reported to the government. else Deffered tax Assets.
eg:- If the an Asset value is Rs:10,000, depreciation as per income tax = 20% and as per companies act = 50%. the deffered tax liability/Assets is
as per income tax = 10000*20% = 2000
as per finance statemtn = 10000*50% = 5000
so differnce = fin statement - income tax = 5000 - 2000 = 3000
find the tax rate on 3000. here is positive balance ie by income tax rate we need to pay extra tax on that year ie 3000. ie prepaid expense we treated as assets. so it is a deffered tax assets.
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