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Referring to answers, how does
1) making inaccurate forecasts in the past and2)presenting future budgets based on general assumptions rather than on expected ones
enable the use of the deferred tax asset ?
Thank you in advance!
Hi,
We can only recognise the deferred tax asset if we believe that we will return to profitability in the future. Any inaccurate forecasting or general assumptions that suggest the company will be profitable in the future will therefore mean that we are incorrectly recognising a deferred tax asset.
Thanks
For the same question its given chemclean recognised a net deferred tax asset of $16m which represented 18% of its total equity . The asset was made up of 3m taxable temporary differences and 19m relating to the carry forward of unused tax losses. Tax rate is 30%
Answer says. In order to use the deferred tax asset of 16m chemclean would have to recognize a profit of $53.3m at the existing rate of 30%. From where does 53.3 comes ? Not able to understand please explain
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