14 March 2014
Z Ltd. has provided depreciation as per accounting records ` 5.00 lakhs and as per tax records it is ` 8.00 lakhs. An unamortised preliminary expense as per tax records is ` 6,500. There is adequate evidence of future profits sufficiency. How much deferred tax assets/liabilities should be recognized as per AS-22 ? Tax rate is 30%.
i have typed this question as it is provided in book, their is no further information is available and it is asked in ca final examination and the solution is as under ( and please don't change tax rate for caln )
It is a case of timing difference Excess depreciation as per tax records =` ( 8,00,000 – 5,00,000) =` 3,00,000. Less, expenses provided in taxable income ` 6,500. 2,93,500 As tax expense is more than the current tax due to timing difference of Rs 293500, therefore D.T.L =30% of ` 2,93,500 = ` 88,050 shall be credited in accounts
but why he reduce preliminary expenses because in another question he did reverse of it see the below question it is also asked in ca final
q) Rama Ltd. has provided the following information: Depreciation as per accounting records = ` 2,00,000 Depreciation as per income-tax records = ` 5,00,000 Unamortised preliminary expenses as per tax record = ` 30,000
There is adequate evidence of future profit sufficiency. How much deferred Tax asset/liability should be recognized as transition adjustment ? Tax rate 50%.
solution as provided by them
Excess depreciation as per tax AMOUNT @ 50% records (5,00,000 - 2,00,000) DTL 1,50,000
Unamortised preliminary expenses (15,000) as per tax records _________ 1,35,000
in both the cases he reduce preliminary expenses which is allowed as per income tax act but why
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