Interested to Buy Any Domain ? << Click Here >> for more details...
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
Excise duty applicable for Handmade Production?
what is capital account? how to manage it? what is the process?
what is CST % applicable on garments sales to other state?
What is Excise duty? What is Edu Cess & Sec Edu Cess? Why and when it is applicable? What is Excise Claiming?
We are Interior Decorators in Chennai,Tamilnadu. I would like to know the vat applicable for us 14.5% or 5%. We supply the material and do the works at the sites itself.
How to adjustment of CST ? and also tell me about C-Form affairs ?
What do you understand by transfer income?
A Service provided has provided bill amounting rs. 100000 dt. 30/04/2013 & i have paid amount with 30000 Rs. as on 24/5/2013, & 20000 paid on 7/6/2013 & rest of the amount has been paid as on 15/6/2013 then on which amount TDS has been deducted. may it deducted on Bill amount or payment amount? If bill amount then at which date TDS entry should be done ? & if on Payment date then which date. and if i want to compute interest for late payment of TDS then Which date should be consider for interest payment computation. Do the needful for the same.
If a nri buys property in india, does he has to pay property tax?
over all details about tax what is mean by headge fund and detail explanation?
what is the percentage of W.C.T T.D.S to deduct from vendor, and is this includes T.D.S deduction or again T.D.S has to deduct separately?
WHAT IS THE MAIN OBJECTIVE TO ISSUE THE WAYBILL TO THE SUPPLIER ? WHAT IS THE TAX LIABILITY ARISES ? WHO HAS THE OBLIGATION TO PAY THE TAX ?
we have sale material to party and freight paid by us. This freight charged in sale invoice than what is the entry of service tax in this case.
should pranav mukherjee has done things good, by giving burden to vodafone a huge tax liabilty.....it will not affect our fdi???
how many sale tax charged on the billing for central dealer by uttar pradesh dealer at furniture items ? & how many sale tax charged for u.p. dealer by up dealer ?
