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sir i understand that as far as unused tax losses are concerned, we will need future profits against which our current losses will be offset and we will get tax credit in the future. but we need to use DT and accrual basis, and so since losses are occurring now, a DT asset will be created now, showing a future tax relief now.
So, clearly i understand the need for future profits.
What i am not able to figure out is this —-the entity needs “sufficient taxable temporary differences against which unused tax losses can be offset”—-a line in my study text.
Losses b’f 100
Expected future profits 80
DT asset = 20% of 80 not 100