OpenTuition | ACCA | CIMA
Free ACCA and CIMA on line courses | Free ACCA, CIMA, FIA Notes, Lectures, Tests and Forums
Spread the word
If you have benefited from our materials, please spread the word so more students can benefit.
To help us keep materials up to do and add new content you can also donate
May 27, 2020 at 8:28 pm
Should we charge Deferred Tax on Intangible Asset?
May 25, 2019 at 9:08 am
So, considering the following
Depreciation charged on asset for the current year is 20 000$ as per companies policy. But depreciation charged for the asset as per tax rules is 37 500$. Tax rate is 20%
So it means there is a tax savings of
4 000$ (20 000*20% as per company policy) & 7 500$ (37 500*20% as per tax rules)
Does this not mean that i have a deferred tax asset of 3 500$ and not a deferred tax liability as i have charged lower depreciation (20 000$) as against the depreciation per the tax rules (37 500$)
December 10, 2019 at 2:32 am
The fact is that the CA charged is faster than the depreciation lead to tax differences (and deferred tax liability where CV is greater than the TB). Means the entity is enjoying more tax deduction now and less in future thus form a deferred tax liability.
September 5, 2018 at 6:45 am
Thank You, Mr Tutor. Super explained!
September 5, 2018 at 7:54 pm
And thank you for the kind comment, I’m glad it has helped you understand the mysterious world of deferred tax.
You must be logged in to post a comment.