What is deffer tax, asset & liability ?
How to set iff deffer asset & deffer liability?
ROHIT
(ACCOUNTANT)
(25 Points)
Replied 18 January 2010
deffer is diffrance of fixed aseets through income tax low and company low.
than deffer is assets nothing liabilites
Ashish Ojha
(Chartered Accountant)
(469 Points)
Replied 18 January 2010
Tax paid is calculated as per taxation provisions applicable to a specific entity.. while Accounting income is calculated according to AS issued... Thus There may be a difference in taxable and accounting income... In order to show true and fair view in financial Statements a concept known as Deffered Tax Assets/ Liabilties as evolved..
In simple language, If u are paying higher tax today due to a method in tax laws which is computing higher income today compared with future, then a part of tax paid today shall not be charged to P&L and will be treated as Deffered Tax Asset untill the effect of that different method of tax method is nullified...
For more details refer to AS 22, Accounting for Taxes
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