what is the treatment for DEFERRED TAX ASSET and DEFERRED TAX LIABILITY after the creation of those in the next financial years
how they need to be adjusted?
8 Replies
CA Sachin Rastogi
(Audit/IFRS Manager)
(338 Points)
Replied 29 March 2012
In the next year, you need to adjust them based on the temporary differences arising in that year and on the basis of tax rates applicable for next year.
VENKAT.P
(CA FINAL-AUDIT EXECUTIVE)
(33 Points)
Replied 29 March 2012
thank u sir
but what is the treatment for the DTL created in the first year and in the second year if DTA is created
CA Sachin Rastogi
(Audit/IFRS Manager)
(338 Points)
Replied 29 March 2012
DTL will be reversed to the income statement and from there DTA will be created.
VENKAT.P
(CA FINAL-AUDIT EXECUTIVE)
(33 Points)
Replied 29 March 2012
U MEAN to say that the DTL will be adjusted with DTA ??
praveen
(Chartered Accountant)
(6971 Points)
Replied 29 March 2012
DTA or DTL created in any year goes on reducing and finally become NIL as it is only a timing difference. But due to a number similar events that occur through out the life of the company there is always a chance that the DTA or DTL will never close as it is a cycle.
rakesh kumar sinha
(value)
(27 Points)
Replied 30 March 2012
yes as per AS 22 deferred tax asset can be adjusted from DTL provided that sufficient future taxable income available against which such DTA can be adjusted. however it will be determined by managment .
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