In $

In $
2012
DTL
DTA
DTL
20
4
16
15
15
20
5
3
3
34
40
18
9
6(DTL)
9(DTA)
2.4
3.6
2011

DTA
Depreciation
warranty
merchandise
magzine subscription
compensation
Total
Net
TAX 40%

Less:-

Statement of Income
Particulars
2011
profit as per financial
100
other income
1
Total
101
Tax Expense
current Tax
32
Deferred Tax
Asset/Liablities
profit after tax

2.4
66.6

In $
2012
100
1
101
38.4
-3.6
66.2

Add:Less:Add:Less:Less:Add:Add:-

Amount (in millions)

2011
100
20
-40
30
-14
-20
3
79
1
80
32

profit before tax

Depreciation
Depreciation
warranty Exp
warranty Exp
Merchandise*
Magzine subscription
Magzine subscription
Compensation
Total Income
OTHER INCOME
CURRENT TAX 40%

Note*

since sale of merchandise already recognised as

income and any return in further year will reduce
the the income and consequently reduce the tax
liablity. Therefore it will create the deferred tax
asset

Journal entries
Profit & loss A/c
DR
DTL
CR
(being DTL created)
DTL A/C

DR

Profit & loss A/c

CR
(being reversal of DTL)
DTA A/c
DR
Profit & Loss A/C CR
(being DTA created)

2011 Note
2.4
2.4
In balance sheet it will r
2012
2.4
2.4

Reversal of Liablities cre

2012
3.6
3.6

In balance sheet it will r

Amount (in millions)

2012
100
20
-24 TIMING
TIMING
-16
TIMING
TIMING
15
TIMING
95
1
96
38.4

DIFFERENCE CREATE DTL

DIFFERENCE CREATE DTA
DIFFERENCE CREATE DTA
DIFFERENCE CREATE DTL
DIFFERENCE CREATE DTA

ady recognised as
er year will reduce
tly reduce the tax
the deferred tax

n balance sheet it will recognised under NON CURRENT LIABLITIES

eversal of Liablities creteated in previous year

n balance sheet it will recognised under NON CURRENT ASSET