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What is the example of the narrative in inverted commas:
What happens when there are insufficient taxable temporary differences? It may still be possible to recognise the deferred tax asset, but only to the following extent.
Taxable profits are sufficient in the same period as the reversal of the deductible temporary difference, “ignoring taxable amounts arising from deductible temporary differences arising in future periods”
I’m not sure why the inverted commas are there – it makes equally good sense without them Or are they your commas which you now want to have me explain?
Anyway, the explanation is this! If you wish to carry forward a deferred tax asset rather than expense it, there should be sufficient long-tern deferred tax liabilities against which the deferred tax asset shall be written off.
In other words, a deferred tax asset shall only be carried forward in so far as there are permanent, rather than temporary, deferred tax liabilities against which will reduce that deferred tax asset in the long term.
Does that explain it well enough for you? If not, post again
That explains well the availability of TTD now what about taxable profit I know that they should be sufficient as well when the expense will be charged by the tax authorities but the statement above in inverted commas exclude particular type of taxable income I didn’t understand that income
Temporary timing differences are those which will reverse because of the different ways in which the taxman arrives at taxable profits. For example, royalty income receivable will be accounted for on an accruals basis by the accountant but the taxman taxes it on the receipts basis ie it is taxable in the tax year in which it is actually received. That would be an example of a temporary taxable timing difference (interest paid and received are others but there are others besides those I have used to illustrate the issue)
is that ok?
Hmmmmm… OK I will make the question close ended: in my first post the inverted commas line has a reference to DTD arising in future period does that refers to the period of when taxable profits are sufficient or some later period
P1 WHEN WE RECOGNISE DEFER TAX ASSET
P2 WHEN DTD WILL REVERSE(SUFFICIENT PROFIT AVAILABLE)
P3 SOME LATER PERIODSORRY IF I AM IRRRITATING YOU HOPE YOU LIKE INTERACTIVE STUDENTS 🙂
P2!
Don’t worry about irritating me – I have always found that sleeping was a waste of time!
Only joking!
Hopefully this will clear everything can you give me an example of an event or transaction that causes a taxable amount and will also be deducted from future taxable profits
Interest payable? Required for accounting purposes but disallowed for tax giving rise to a tax liability which will, next year, be allowed on a receipts basis
Hi.Teacher Mike!Have a nice day.I m n’t sure…Please…Deferred tax liability arises from taxable temporary differences.
Deferred tax assest is arises from deductable temporary differences.
Wanna to know clearly meaning of Deductable temporary differences ?Result of Temporary difference is Negative?(When C.V of A/L minus Tax based of A/L.)
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