Understanding Deferred Tax Liability

The document illustrates the calculation of Deferred Tax Liability (DTL) due to differing depreciation rates between company and IT books. It details the depreciation schedule for a machine over three years and the resulting tax implications, including income tax expenses. The tax rate applied is 30%, and the example shows how DTL reverses over time as the book values align.

Uploaded by

animesh.recl

We take content rights seriously. If you suspect this is your content, claim it here.

Available Formats

Download as XLSX, PDF, TXT or read online on Scribd

0% found this document useful (0 votes)

6 views3 pages

Understanding Deferred Tax Liability

Uploaded by

animesh.recl

We take content rights seriously. If you suspect this is your content, claim it here.

Available Formats

Download as XLSX, PDF, TXT or read online on Scribd

An example on Deferred Tax Liability

Rate of depreciation is 33.33% in company's books and 50% in IT books. Straight-line method.

DEFERRED
TAX RETAINED
CASH TAX
PAYABLE EARNINGS
LIABILITY

7.5 127.5 (135.0) IT Expense

(15.0) 150.0 (135.0) IT Expense

0 Zero means reversal of previous DTL due to a temporary diff

TAX RATE 30%

COST OF MACHINE 150

USEFUL LIFE 3

IT BOOKS COMPANY'S BOOKS

YEAR
150 150 COST
1 -75 -50 DEPRECIATION
75 100 BOOK VALUE
2 -75 -50 DEPRECIATION
0 50 BOOK VALUE
3 0 -50 DEPRECIATION
0 0 BOOK VALUE

ASSUMING PROFIT BEFORE DEPRECIATION OF 500 EVERY YEAR

PROFIT AFTER DEPRECIATION INCOME TAX EXPENSE

YEAR IT BOOKS COMPANY'S BOOKS IT BOOKS

1 425 450 127.5

2 425 450 127.5

3 500 450 150.0

vious DTL due to a temporary difference is complete.

OME TAX EXPENSE

COMPANY'S BOOKS

135.0

What Are Some Examples of A Deferred Tax Liability?
No ratings yet
What Are Some Examples of A Deferred Tax Liability?
9 pages
Understanding Deferred Taxes and Liabilities
No ratings yet
Understanding Deferred Taxes and Liabilities
10 pages
Understanding Deferred Tax Accounting
No ratings yet
Understanding Deferred Tax Accounting
3 pages
Accounting for Income Tax: Deferred Tax
100% (1)
Accounting for Income Tax: Deferred Tax
26 pages
Understanding Deferred Tax Assets and Liabilities
100% (2)
Understanding Deferred Tax Assets and Liabilities
4 pages
Accounting for Income Taxes Explained
No ratings yet
Accounting for Income Taxes Explained
9 pages
Deferred Tax DTA DTL
No ratings yet
Deferred Tax DTA DTL
20 pages
Study Unit 20 Accounting For Income Taxes
No ratings yet
Study Unit 20 Accounting For Income Taxes
64 pages
DTL Example 1
No ratings yet
DTL Example 1
3 pages
Understanding IAS 12: Tax Differences
No ratings yet
Understanding IAS 12: Tax Differences
10 pages
Understanding Deferred Tax Accounting
100% (3)
Understanding Deferred Tax Accounting
14 pages
Understanding Deferred Tax Liabilities
No ratings yet
Understanding Deferred Tax Liabilities
7 pages
Understanding Deferred Tax Liabilities
No ratings yet
Understanding Deferred Tax Liabilities
16 pages
Accounting For Income Taxes
No ratings yet
Accounting For Income Taxes
7 pages
Accounting For Income Tax
No ratings yet
Accounting For Income Tax
18 pages
Understanding IAS-12 Income Taxes
No ratings yet
Understanding IAS-12 Income Taxes
28 pages
Accounting for Income Taxes Explained
No ratings yet
Accounting for Income Taxes Explained
9 pages
Current vs Deferred Tax Explained
No ratings yet
Current vs Deferred Tax Explained
8 pages
IAS 12: Current and Deferred Tax Explained
No ratings yet
IAS 12: Current and Deferred Tax Explained
45 pages
Deferred Tax Accounting in AC2101
No ratings yet
Deferred Tax Accounting in AC2101
33 pages
Understanding Deferred Taxation Concepts
No ratings yet
Understanding Deferred Taxation Concepts
7 pages
AS 22: Accounting for Deferred Taxes
100% (1)
AS 22: Accounting for Deferred Taxes
25 pages
Understanding Income Tax Accounting
No ratings yet
Understanding Income Tax Accounting
16 pages
Deferred Tax 1
No ratings yet
Deferred Tax 1
1 page
Accounting for Income Taxes Explained
No ratings yet
Accounting for Income Taxes Explained
11 pages
IAS 12: Permanent vs Temporary Tax Differences
No ratings yet
IAS 12: Permanent vs Temporary Tax Differences
9 pages
Income Tax Accounting Explained
No ratings yet
Income Tax Accounting Explained
14 pages
Malaysian Taxation and Deferred Taxes Guide
No ratings yet
Malaysian Taxation and Deferred Taxes Guide
49 pages
Understanding Deferred Taxes Explained
No ratings yet
Understanding Deferred Taxes Explained
83 pages
Deferred Taxes in Financial Analysis
No ratings yet
Deferred Taxes in Financial Analysis
26 pages
Income Taxes: Deferred Tax Liabilities Guide
No ratings yet
Income Taxes: Deferred Tax Liabilities Guide
54 pages
Income Tax Accounting Explained
No ratings yet
Income Tax Accounting Explained
26 pages
Income Tax Expense and Timing Differences
No ratings yet
Income Tax Expense and Timing Differences
30 pages
Understanding Deferred Taxes in Malaysia
No ratings yet
Understanding Deferred Taxes in Malaysia
47 pages
Accounting for Income Taxes Explained
100% (5)
Accounting for Income Taxes Explained
16 pages
Understanding Deferred Income Taxes
No ratings yet
Understanding Deferred Income Taxes
38 pages
Understanding Deferred Tax Accounting
No ratings yet
Understanding Deferred Tax Accounting
30 pages
Accounting For Income Taxes: About This Chapter!
No ratings yet
Accounting For Income Taxes: About This Chapter!
9 pages
IAS - 12 (Presentation Slides)
No ratings yet
IAS - 12 (Presentation Slides)
78 pages
Tax Accounting: Deferred Tax Assets Guide
No ratings yet
Tax Accounting: Deferred Tax Assets Guide
25 pages
Taxation in Company Accounts (Ias 12) Notes
No ratings yet
Taxation in Company Accounts (Ias 12) Notes
11 pages
财务报表与税务分析指南
No ratings yet
财务报表与税务分析指南
24 pages
Pertemuan 12 Chapter 19 Kieso
No ratings yet
Pertemuan 12 Chapter 19 Kieso
90 pages
As 22
No ratings yet
As 22
14 pages
Understanding Deferred Tax Accounting
No ratings yet
Understanding Deferred Tax Accounting
44 pages
Deferred vs Taxable Income Accounting
No ratings yet
Deferred vs Taxable Income Accounting
4 pages
Understanding Deferred Tax Concepts
No ratings yet
Understanding Deferred Tax Concepts
4 pages
Income Tax Provisions and Calculations
No ratings yet
Income Tax Provisions and Calculations
50 pages
Deferred Tax Accounting Explained
No ratings yet
Deferred Tax Accounting Explained
70 pages
Topic 8 - Accounting For Income Taxes
No ratings yet
Topic 8 - Accounting For Income Taxes
65 pages
Understanding Deferred Tax Concepts
No ratings yet
Understanding Deferred Tax Concepts
3 pages
AS 22: Accounting for Deferred Taxes
No ratings yet
AS 22: Accounting for Deferred Taxes
13 pages
Accounting for Income Taxes Under IFRS
No ratings yet
Accounting for Income Taxes Under IFRS
59 pages
Understanding Deferred Tax Liabilities
No ratings yet
Understanding Deferred Tax Liabilities
22 pages
Deferred Tax Technical Articles
No ratings yet
Deferred Tax Technical Articles
15 pages
Income Tax Reporting Solutions Guide
0% (1)
Income Tax Reporting Solutions Guide
63 pages
IAS 12 Income Taxes Overview and Examples
No ratings yet
IAS 12 Income Taxes Overview and Examples
31 pages
Permanent vs. Temporary Tax Differences
No ratings yet
Permanent vs. Temporary Tax Differences
4 pages
Tax Expense Calculation Overview
No ratings yet
Tax Expense Calculation Overview
13 pages

Understanding Deferred Tax Liability

Uploaded by

Understanding Deferred Tax Liability

Uploaded by

An example on Deferred Tax Liability

7.5 127.5 (135.0) IT Expense

7.5 127.5 (135.0) IT Expense

(15.0) 150.0 (135.0) IT Expense

0 Zero means reversal of previous DTL due to a temporary diff

COST OF MACHINE 150

IT BOOKS COMPANY'S BOOKS

ASSUMING PROFIT BEFORE DEPRECIATION OF 500 EVERY YEAR

YEAR IT BOOKS COMPANY'S BOOKS IT BOOKS

1 425 450 127.5

2 425 450 127.5

3 500 450 150.0

vious DTL due to a temporary difference is complete.

You might also like