Answered: Will the existence of unused tax losses…

Will the existence of unused tax losses always lead to the recognition of a deferred tax assets? Explain your answer with suitable example.

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter14: Taxes On The Financial Statements

Section: Chapter Questions

Problem 49P

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Will the existence of unused tax losses always lead to the recognition of a deferred tax assets? Explain your answer with suitable example.

Definition Definition Estimated future tax made while preparing accounts. Deferred tax is estimated based on past and present transactions from financial statements. It is not the actual tax that needs to be paid or is refundable from the revenue authority; it is an accounting entry. It is necessary to account for deferred tax due to difference between accounting profits and taxable profits.

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