26 July 2010
for the purpose of treating the unabsorbed depreciation if there is virtual certainity tat the company wil earn profits in the near future then deferred tax asset can be created
virtual certainity is required and not just reasonable certainity
26 July 2010
As far as unabsorbed depreciation is concerned, reasonable certainty is enough to recognize deferred tax asset. But in the case of unabsorbed business loss, virtual certainty is compulsory to recognize deferred tax asset.
26 July 2010
Para 17 of AS 22 says "Where an enterprise has unabsorbed depreciation or carry forward of losses under tax laws, deferred tax assets should be recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised."
so i thnik virutal evidence is required even for unabsorbed depreciation
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