Treatment of deferred tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

09 September 2014 A company was charging depreciation on wdv method of income tax in books from year of incorporation. this year it has changed the method of depreciation to straight line method of companies act with retrospective effect. as a result depreciation saved(cr) has been charged to profit and loss account.

My query is (i) whether the deferred tax will be calculated considering differences of depreciation of all the years or difference of current year only.

(ii) whether deferred tax also be calculated on depreciation saved and added back to profit and loss account.

pls reply urgently.

Ashwani Narnoli

Ashwani Narnoli (Expert)
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10 September 2014 In my opinion Deffered tax is to be calculated only on the diff of dep of all the yrs.

Querist : Anonymous

Querist : Anonymous (Querist)

10 September 2014 thanks sir,
how we show the deferred tax value of earlier years charged to profit and loss as prior period item or merged the value in deferred tax of current year.

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Ashwani Narnoli

Ashwani Narnoli (Expert)
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10 September 2014 it should be merged with current year