Interested to Buy Any Domain ? << Click Here >> for more details...
What is Deferred tax??
- 2 Answers
- 9016 Views
- QX Limited, I also Faced
- E-Mail Answers
Answers were Sorted based on User's Feedback
Answer / barodianbuddy(acca)
deferred tax arises because accounting profit will not be equal to taxable profit. The reason can be split into 2 categories:
1. permanent difference:- items that would have been used in calculating accounting profit but would not be used in calculating taxable profit. eg entertaining expenses (UK tax)
2. TEMPORARY DIFFERENCE:- Items that would have been used in calculating accounting profit and taxable profit but in different accounting periods. eg depreciation/tax allowances.
IAS 12 considers only the temporary differences.
| Is This Answer Correct ? | 4 Yes | 3 No |
Answer / 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 |
What is means by sales tax (vat also)? How to calculate Sales tax (vat also)? Sales tax form no. (vat also) ?
how to reconccile account payable & account receivable.please provide best solution with example
interest paid to bank rs. 15000 in connection with overdraft obtained for paying dividend.
What is the meaning & definition of "THRESHHOLD LIMIT" in TDS?
How can I Return CST Form-I
in a company, if employee contributing To PF equal to employer contribution. can he voluntarily stop his contribution while he is in service with that company?
Ina earth work excavation and filling work , wct is applicable?
If we purchase material against Form-C from Mumbai and two address mentioned in the invoice i.e.invoiced address - Delhi and Shipped address-Banglore(material delivered address).So,from-C should be issued from which state.
what is the entry made by purchaser received stock transfer against form f for inter state stock transfer from sister concern company
What is RG1 Register, why we make this register and which items shown in this register,
why use the tax & duty in Accounts
what is the prime cost? and factory cost how to calculate it?
Audit 
