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“Deferred tax assets less deferred tax liabilities represent 25% of shareholders’ equity at 31 May 2010”
“There are no tax planning opportunities available to Cate that would create taxable pro?t in the near future”(by me:in the start of the question it says that it has ability to generate profit in the future)
These two lines are taken from the Cate June 2010 Question related to deferred tax what exactly does these line mean?
Just from reading your two extracts, the deferred tax net asset is worthless! It should only be carried forward as an asset if there is a reasonable expectation of taxable profits against which the deferred tax asset may be set. So Cate Ltd is in a bit of trouble if the realisable value of one of its major assets (25% of equity) is irrecoverabe
OK?
how did you infer that 25% equity is irrecoverable (you mean net asset is irrecoverable ‘Equity =asset-liabilities’)
I didn’t say 25% of equity is irrecoverable – this is what I wrote: “So Cate Ltd is in a bit of trouble if the realisable value of one of its major assets (25% of equity) is irrecoverabe” (irrecoverable)
OK?
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