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sir could u plz explain why we wont book defer tax liabilty where
“liabilities arising from goodwill for which amortization is not deductable for tax purposes” thanksdef tax arises because of timing differences. That is, where an asset can be depreciated over a period of time reflecting its use, and therefore reflecting the fact that over its life the asset will be expensed against profits, goodwill has no timing difference. It is not an allowable deduction for the purposes of tax computations. Depreciation is ( in the form of the taxman’s version of depreciation – capital allowances )
Because goodwill impairment has to be added back in a tax comp, and is not compensated by any capital allowance, then def tax becomes not applicable.
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