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    DTL is created When you actually depr faster, thereby profit is less, therefore tax payable [a ctual] is less than a / c tax exp, you end up creating DTL to be paid later. This process is known as unwinding of DTL.

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    DTL is created When you actually depr faster, thereby profit is less, therefore tax payable [a ctual] is less than a / c tax exp, you end up creating DTL to be paid later. This process is known as unwinding of DTL.

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    7 views1 page

    New Text Document

    Uploaded by

    anandparanilesh
    DTL is created When you actually depr faster, thereby profit is less, therefore tax payable [a ctual] is less than a / c tax exp, you end up creating DTL to be paid later. This process is known as unwinding of DTL.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as TXT, PDF, TXT or read online from Scribd
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    of 1

    x=0 x = (21-x+)*2/3 = 14

    x=14 x = 7*2/3 = 4.67


    x= 4.67 x = 2.33
    Taxes Payable + delta DTL - delta DTA = Tax Expense
    A/c Tax Exp > Tax Payable...DTL is created
    When you actually depr faster, thereby profit is less, therefore tax payable [a
    ctual] is less than A/C Tax Exp, you end up creating DTL to be paid later.
    In subsequent years, due to actual low depr, more actual tax, more than a/c tax
    exp, you end up creating DTA which is then offset against DTL
    this process is known as unwinding of DTL.
    ==================Accounting Tax=====================
    =========Actual Income Tax=========
    Revenue 16000 16000
    16000 Revenue 16000 16
    000 16000
    A/c Depr Exp 7000 7000
    7000 Tax Depr 14000 4
    667 2333
    -------------------------------------
    ------------------- -------------------------
    ------------------------------
    PBT [a/c profit] 9000 9000
    9000 Taxable Income 2000 11333
    13667
    ------------------------------------
    -------------------- -------------------------
    ------------------------------
    A/c Tax Exp [30%] (2700) (2700)
    (2700) Tax Payable[30%] (600) (3400)
    (4100)
    Tax payable (600) (3400)
    (4100) ==============================================
    Delta (DTL)/DTA (2100) 700
    1400
    Total (DTL) (2100) (1400)
    0 ...DTL is reversing.
    ================================================================================
    ======================
    A/c Depr 7000 7000
    7000
    Tax Depr (14000) (4667)
    (2333)
    ------------------------------------------
    --------------
    (7000) 2333
    4667
    30%Tax = (DTL)/DTA (2100) 700
    1400 which is our Delta DTL
    Total (DTL) (2100) (1400)
    0

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