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Deferred tax problem
10-03-2010, 05:56 AM
Post: #1
Deferred tax problem
Dear all readers,
While reviewing the financial statement of Lucky cement Pakistan i have a problem to understand that why deferred tax of company is positive Rs456,535 (page #34 at http//www.lucky-cement.com/Financialreport%20pdf/01%202007%20to%20June%2030%202008/Annual%20Account%202008.pdf).
Tax is our liability we have to pay the tax then why it is adding up in total profit of company ( here do not confuse that figure 456.535 is in ( ) so it is subtracting actually it is adding. basically they are subtracting that figure of deferred tax from total taxation.
so any one can kindly explain me the reason of that figure and on which cases deferred tax become positive in essay language. It will also be appreciated if some one will interpret the Net profit of lucky cement of 2008 i.e major reason for that net profit .

Thanks .
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10-06-2010, 04:48 PM
Post: #2
 
Dear,

You are requested to kindly grasp IAS 12, Deferred Tax, so that your basic queries with regard to the nature of deferred tax(i.e. in which cases it becomes Assets and in which cases a liability), may be resolved.

As far as the accounts of lucky cement is concerned, please note that in 2007, Deferred Tax is being added, which indicates deferred tax liability; however, in 2008, deferred tax asset must have been arisen, which wiped off the deferred tax liability altogether, and deferred tax asset has been offset from the current tax obligation. In the end, figure shown in ( ) is being added, since it is a deferred income (because tax obligation will be reduced from the deferred tax asset, being shown in parentheses).

Let me know if confusion is yet to be resolved, however, you are to go through IAS 12.

Best Regards,

Faisal.
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10-13-2010, 07:15 AM
Post: #3
 
thanks dude. cleared
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