Chapter 17 Deferred tax

Question 1

Deferred tax

Answer 1

Temporary difference
* Asset: CA>TB = TTD (DTL)
* Liability: CA>TB = DTD (DTA)
Vice versa

Exp: Asset CA 100 > Tax base 80
CA is higher, current year a/c depreciation is lower
TB is lower, current year tax depreciation is higher - means in the future less deduction - so in future pay more tax

Question 2

DTA & DTL

Answer 2

TTD x tax rate = DTL
DTD x tax rate = DTA

DTA = taxable income, pay lesser tax in the future

Question 3

Deferred tax in FV adjustment

Answer 3

Goodwill dun have deferred tax
but FV adjustment has in consol

Exp: land FV increase –> CA increase > TB no change –> result in TTD x tax rate = DTL
FV adj - Dr land Cr GW, Deferred tax - Dr GW Cr DTL