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Deferred Tax Liability

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Deferred Tax Liability

  • This topic has 1 reply, 2 voices, and was last updated 11 years ago by John Moffat.
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  • April 29, 2014 at 4:28 pm #166775
    sukhdeo
    Member
    • Topics: 24
    • Replies: 22
    • ☆

    In calculating the net assets of a target company, would deferred tax liability be a deduction from total assets of the company . In Bpp Text , a deduction from the asset of the target company was made for deferred tax liability. Can u please explain why a deduction , since in my view it does not require and actual payment as creditors.

    April 30, 2014 at 7:53 am #166856
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    Although there is no current liability, it will mean that there will be a future liability (for the actual tax to ‘catch up’ with the tax that has been charged in the accounts. So it is fair enough to subtract this from the net assets.

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