Chapter 17 Deferred tax Flashcards

1
Q

Deferred tax

A

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

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2
Q

DTA & DTL

A

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

DTA = taxable income, pay lesser tax in the future

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3
Q

Deferred tax in FV adjustment

A

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

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