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Hi, Sir. Past year question Mar 2019 Q4 II)
Ans: The accounting for deferred tax seems to be based upon the matching principle of income and tax expenses rather than the definitions of an asset and a liability, with the result that the model results in deferred debits which are unlikely to result in tax cash outflows and thus do not meet the criterionof an expected future outflow of economic benefits in the Conceptual Framework.
My question is why will result in deferred debit?
I don’t know what they mean by deferred debit – I am sure that no student would have written this. 🙂
The point that matters is that the DT assets and liabilities that arise do not necessarily meet the definition of assets and liabilities in the conceptual frameworks.
If I revalue an asset, there will be a DT liability – but if I have no intention of ever selling the asset, there will never be an outflow of economic benefits.
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