a company earlier has disclosed by way of a note its deferred tax asset figure, but this time it has brought that very figure into accounts only by adding the same with general reserve. is their treatment is right?
Jay Chakraborty (Section Officer) (127 Points)
07 August 2009a company earlier has disclosed by way of a note its deferred tax asset figure, but this time it has brought that very figure into accounts only by adding the same with general reserve. is their treatment is right?
Narayanan Balakrishnan
(Chartered Accountant)
(98 Points)
Replied 07 August 2009
As per AS-22 deferred tax asset can be recognised when there is reasonable certanity of realising tt. For recognising DTA on carried forward loss there should be virtual certainity. But the deferred tax recognised has to be included in the P&L account and cannot be adjusted directly in the opening reserves.
Landmark Judgments: Important Provisions of the EPF & ESI Act interpreted by the Honorable Supreme Court of India