Deffered Tax Asset & Deffered Tax Liability.

[Asked by Guest]

Dear Sir,

My client is Pvt. Ltd. Company and his accounting figure  for the FY 2011-12.

Deffered Tax Assets Op. Bal -  Rs. 10489
Preliminary Expenses as per IT Act                 --  Rs. 17160
Depreciation as per Co. Acts                        -- Rs. 69722
Depreciation as per IT. Acts                         ----Rs.83370
Book profit as per P & L A/c. --- Rs. 2314052 Including STCG Rs. 132902 & LTCG Rs. 1408209 on share & Dividend Rs. 19000)

Total Income as per Computation                  --- Rs. 873200

Tax on total income       --- Rs. 2,49,285 (STCG 20533+Normal tax 228752)

Minimum alternative tax --- Rs. 437316
(on Book Profit 2314052-19000)

Prelimery Exps.   ====  Rs. 19800 (For Share Capital Increase)
Prelimery Exps.   ====  Rs. 66000 (For Share Capital Increase)
                                                  ========
Total Exps.                               85800
                                                  ========

Total Exps. 85800 /5 Years = 17160 (Deduction u/s 35 D of I. T.)

What is the amount of Defferred tax asset or Defferred tax liability to be recognized in current year.

And how to pass the journal entries in accounts.

Thanks & Regards

[CAGOPALJI AGRAWAL]

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AI Summary

Deferred tax recognition reconcile accounting and tax timing differences to determine asset or liability and journal entries.
Reconciling accounting and tax bases to determine deferred tax requires identifying timing differences from differing depreciation and preliminary expense treatments, quantifying each temporary difference (net book versus tax base and unamortised preliminary expenses), and applying the tax rate to compute deferred tax assets or liabilities; journal entries should recognise the deferred tax charge or credit in profit or loss and the corresponding deferred tax balance in the balance sheet.