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
2
Q
DTA & DTL
A
TTD x tax rate = DTL
DTD x tax rate = DTA
DTA = taxable income, pay lesser tax in the future
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