What is the base for the calculation? The WDV or depreciation difference should be taken in the calculation. Please tell me.
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Deferred tax liability is responsibility for taxes that are owed, but not yet paid. There are certain circumstances in which companies or taxpayers may incur tax liability but not pay the taxes right away. They record this as a liability on their accounts so that they have a more complete picture of their finances. High deferred tax liability can indicate that a person or company is using unusual accounting practices and can be a cause for concern.
One common example of deferred tax liability is a situation where there is a difference between the way a company values things for accounting purposes when compared to tax purposes. A transaction may be recorded on the books before it is officially taxable, for example. The company makes note of the deferred tax liability because otherwise there would be no way to mark down that it will owe taxes on that transaction in the future.
Accounting for deferred tax liabilities allows companies to estimate how much they will need to pay in taxes so that they can set aside funds to do so. Meanwhile, companies are also making tax payments to stay current with estimated taxes, and obtain a credit against their tax bill in the process. It is important to pay attention to how much money has been paid and will be owed in taxes in order to avoid unpleasant surprises like an unexpectedly high tax bill.
Essentially, deferred tax liability is an amount that a company owes or will owe in taxes, and has not paid yet. It is possible for companies to make adjustments to estimated tax payments if it knows that its tax bill will be higher than previously estimated to pay those liabilities as they are incurred. This is a not uncommon situation for people and companies with irregular income; a large payment for a single contract, for example, can throw off estimated tax payments.
Accountants need to follow a set of standards when providing accounting services. While there is some variability within the standards, accountants who work outside these standards can get into trouble. One problem that can be seen in some cases is that an accountant does not apply the standards correctly or does not properly account for certain accounting expenses. This can cause trouble at tax time and during audits of finances as questions will be asked about why a person or company's finances were not properly handled.