Deffered Tax Asset and Liability

Rajesh Kumar (Student) (211 Points)

03 December 2008

Hi Sir,

Can anybody tell me what is deffered Tax Asset and deffered Tax Liability.

How it is created and treated in Accounts

Thanks in advance

Rajesh

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CA Trinath Galla (student) (3130 Points)
Replied 03 December 2008

Hi Rajesh

I think as u no

we calculate depreciation on assets of a company as per companies act for accounting purposes

n later when paying income tax we calculate depreciation for the same as per Income Tax act

the depreciation arrive for both the purposes may(will) differ

and the result asset/liability should be shown accordingly in balance sheet

N if the depreciation as per Companies act is more than IT act, The balancing amount should be maintained as Deffered Tax asset

And if Depriciation as per IT act is more dan the Companies act, the balancing amount should be maintained as Deffered tax liability

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