A company claims depreciation of ₹15 lakhs as per tax

Higher tax depreciation taxable income lower now higher tax in future results in Deferred Tax Liability DTL.

laws but only ₹10 lakhs as per books. How should this temporary difference be treated?

A Create Deferred Tax Asset Correct Answer Incorrect Answer

B Create Deferred Tax Liability Correct Answer Incorrect Answer

C No deferred tax recognition Correct Answer Incorrect Answer

D Adjust against reserves Correct Answer Incorrect Answer

E Show in OCI only Correct Answer Incorrect Answer

Solution

Higher tax depreciation → taxable income lower now → higher tax in future → results in Deferred Tax Liability (DTL).

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