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Chapter 20
Example 9.3
Dr Deferred tax asset (SFP $67,500
Cr Statement of profit or loss (SPL) $67,500
The temporary difference is $300,000 (the value of the losses available for carry
forward).
However, a deferred tax asset can only be recognised to the extent it is
probable that these losses can be utilised against future profits.
Based on current estimates, only $225,000 of the losses (3 × $75,000) will be
carried forward for offset against future profits.
Therefore, a deferred tax asset of $225,000 × 30% = $67,500 can be
recognised.
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