• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

Income Tax

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Income Tax

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by MikeLittle.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • April 10, 2018 at 7:22 pm #446026
    marine09
    Member
    • Topics: 13
    • Replies: 6
    • ☆

    Sir,

    In deferred tax whenever the carrying amount exceeds the tax base amount , it leads to a deferred tax liability. Can you please explain the logic behind it ? I find it difficult to understand the logic behind this .

    April 10, 2018 at 8:08 pm #446038
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23323
    • ☆☆☆☆☆

    Because the company is going to be charging depreciation on the carrying amount but that depreciation will exceed the tax allowances on that same asset

    So the net profit for the year will be increased by the add-back of depreciation and reduced by the smaller figure of capital allowances

    Over the life of the asset, the cost of that asset is allowable against profits for tax reasons

    But where those allowances in the early years may exceed the company’s depreciation calculation, that results in a tax written down value that is lower than the carrying value – it’s as though the taxman has given the company accelerated benefit (when compared with the corresponding depreciation expense)

    But that accelerated benefit is then later caught up as the company charges greater annual depreciation than the year’s tax allowance

    Is that any better?

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • The topic ‘Income Tax’ is closed to new replies.

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • mrjonbain on ACCA BT Chapter 6 – Some legal obligations – Questions
  • Ken Garrett on ACCA BT Chapter 6 – Some legal obligations – Questions
  • Ken Garrett on The nature and structure of organisations – ACCA Paper BT
  • OmarAlbeity on ACCA BT Chapter 6 – Some legal obligations – Questions
  • Salimbek909 on The nature and structure of organisations – ACCA Paper BT

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in