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Dear All
I have been seriously confuesed about these two. Can help to give precise example in elaborate of Deferred Tax Asset and Deferred Tax Liabiities?
Thanks for help.
Where an asset is revalued upwards, we know today that we shall have to pay tax on the gain on that asset. So where the tax base of an asset exceeds the carrying value, calculate the difference, multiply by the current rate of taxation, and that’s the deferred tax liability to carry forward.
The same principle applies where the carrying value is below the tax base (rarely). Carry out the same procedure but only where the timing difference between tax base and carrying value is anticipated to reverse
If that reversal is not anticipated, no deferred tax asset is recognised
Hi mike,
Thank you.
Can please to give an example for reversal part and deferred tax asset?
Eg: loan stock decrease?
Thanks
Why would loan stock decrease?
Where an asset is revalued / impaired down to a level below its tax base, calculate the difference, multiply by the current rate of tax and the result will be the deferred tax asset.
But this will only be done where there is a reasonable expectation that the revaluation will reverse in the future
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