Or A company had purchased an asset at 1,00,000. Estimated useful life of the asset is 5 years and depreciation rate is 20% SLM. Depreciation rate…
CA Final · Financial Reporting · MTP · May 2026
Or A company had purchased an asset at 1,00,000. Estimated useful life of the asset is 5 years and depreciation rate is 20% SLM. Depreciation rate for tax purposes is 25% SLM. The operating profit is 1,00,000 for all the 5 years. Tax rate is 30% for the next 5 years. Calculate the Book Value as per financial and tax purposes and then DTL.
Suggested Answer and Working Notes:
Calculation of the Book Value as per financial and tax purposes. Financial Accounting: 000's Year 1 2 3 4 5 Gross Block 100 100 100 100 100 Accumulated Depreciation 20 40 60 80 100 Carrying Amount 80 60 40 20 0 Tax Accounting: 000's Year 1 2 3 4 5 Gross Block 100 100 100 100 100 Accumulated Depreciation 25 50 75 100 100 Carrying Amount 75 50 25 0 0 Calculation of DTL: 000's Year 1 2 3 4 5 Carrying Amount 80 60 40 20 0 Tax Base 75 50 25 0 0 Difference 5 10 15 20 0 Deferred Tax Liability (Difference x 30%) 1.5 3 4.5 6 0
Topics: Ind AS 38
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