Hello,
When the deferred tax asset will be treated as income and credited to profit and loss account. can u please explain.
DTA/DTL is shown as an adjustment to current tax in P/L.
When tax on book profit is less than tax as per IT Act, the difference will be DTA and, DTL if tax on book profit is greater than tax as per IT act. Such difference arises because of timing difference between allowance of expence in both acts. Eg. dereciation, preliminary exp., 43B of IT Act etc.
If difference results in DTL then entry will be
P&L
To DTL
and subsequently afrer few years such difference will results in DTA in that case DTA will not be created instead such DTL will be adjusted against DTA i.e. DTA will be reversed, entry will be:
DTL dr.
To P&L
CAclubindia
