A deductible temporary difference is a temporary difference that will yield amounts that can be deducted in the future when determining taxable profit or loss. A temporary difference is the difference between the carrying amount of an asset or liability in the balance sheet and its tax base.
Which of the following is an example of a temporary difference that could result in a deferred tax asset?
A temporary difference that would result in deferred tax liability is: Excess of tax depreciation over financial accounting depreciation.
What is temporary difference in deferred tax?
Temporary differences are defined as being differences between the carrying amount of an asset (or liability) within the Statement of Financial Position and its tax base ie the amount at which the asset (or liability) is valued for tax purposes by the relevant tax authority.
Is accounts receivable permanent or temporary difference?
Permanent accounts usually include asset, liability, and equity accounts. Here are a few examples of permanent accounts: Accounts receivable.
When does a company deduct a temporary difference?
Deductible temporary difference is the timing difference that creates tax asset which the company can deduct in the future. In other words, deductible temporary difference creates deferred tax asset. We will have a deductible temporary difference when: carrying value of an asset in the accounting base is smaller than its tax base, or
When is a deferred tax asset considered a deductible temporary difference?
A deferred tax asset is recognized for all deductible temporary differences if it is probable that a taxable profit will be available that will be offset against the deductible differences.
Which is an example of a taxable temporary difference?
Taxable temporary differences Taxable temporary differences are timing differences which cause taxable income in current period to be lower than pretax accounting income subject to taxes and hence income tax payable in current period to be lower than the accrual income tax expense.
What are the different types of tax deductions?
The amount of deductible temporary differences for which no deferred tax asset is recognized. The amount of taxable temporary differences associated with investments in subsidiaries and associates for which no deferred tax liability is recognized. d. The amount of income tax relating to each component of other comprehensive income.
