Answer Posted / jejeswara reddy
The need for deferred tax accounting arises because companies often postpone or pre-pays taxes on profits pertaining to a particular period.
1.deferred tax Liability
2.deferred tax asset
1.deferred tax Liability: There may be a difference in the way certain items of expense are allowed to be treated for tax purposes and how a company actually treats them.
Tax laws allow full depreciation in the first year after a company acquires certain assets. However a company may actually write off the depreciation over several years on its financial statements. The company may charge depreciation at lower rates than allowed under tax laws. Or it may use a different method of charging depreciation.
2.deferred tax asset: The tax laws may not recognize some of the expenses that a company has accounted for in its accounts. For instance, provisions made at the discretion of the management, such as those for bad debts, which are not fully recognized by tax authorities.
In such cases, a company is actually pre-paying taxes pertaining to future years. For the year, the profits that the taxman calculates would be higher than those computed by the company. Therefore a company would save on tax in the years when the expenses or provisions actually materialize.
Adjusting for a deferred tax asset :
There are two classifications for a deferred tax asset:
1. Expense:
a. Is a bonifide GAAP expense today
b. It is not a tax deduction today
Is NOT subtracted from the cash flow calculation
2. Revenue
a. Not a bonifide GAAP expense today
b. It is however taxable income.
Subtracted from the cash flow calculation
Is This Answer Correct ? | 0 Yes | 0 No |
Post New Answer View All Answers
when wct@8.75% is charged from the vendor. How much TDS has to be deducted against it??
What extra accounts and legal formalities are maintened In excise firm other then normal saling firm.? also tell me tax aspect in Excise firm?
WHEN I AM DOING 1ST TIME VAT RETURN E-FILLING, WHAT IS PROCESS FOLLOW HOW GET E-RETURN FILLING PERMISSION HOW APPLY FOR GET THE USER I.D & PASSWORD FOR E-RETURN FILLING IF ELSE, PLEASE GIVE ME THE RIGHT ANSWER ON MY E-MAIL ADDRESS ON sonidilip87@yahoo.com
we have paid excess tds amount in 194I 27000/- for f.y.2017-18 now can we adjust the same in upcoming month 2018-19?
how & on which amt tax should be calculate on pvt ltd company or ltd company
what is excise
how to calculate entry tax interest rate 2011-2012 assessment pending amt. is Rs.32000
How to reconcile a Vendor who is a supplier as well as a Contractor?
what are the benifits available to become and EOU in all taxes, such as Income Tax, Sales Tax, Excise, Custom
Dear Sir, We are running a security agency. Please suggest us Notification No.:15/2012 service Tax dated 17.03.12 which is effected from 01.07.12 Please suggest how to raise bill on our clients.
At what point excise duty is accrued
Can u provided all the dues date and depositing date which are used in general manner or Income tax..
What is meant by asset clearance . how should i make my entries in tally
I have mentioned the buyer as in Kolkata and the consignee's in Jharkhand now the consignee has issued the C Form whether the C Forms is acceptable or not kindly help me
I am working as account in one of the logistics company for one year. I would like to know about service tax and how can I post necessary entries