The motor vehicles were acquired 2 years ago for $ 225 000. For tax purposes, a depreciation rate of 20% is applied (there is no residual value). Deposits are taxable when received, and warranty costs are deductible when paid. An allowance for doubtful debts of $25 000 has been raised against accounts receivable for accounting purposes, but such debts are deductible only when written off as uncollectable.
The motor vehicles were acquired 2 years ago for $ 225 000. For tax purposes, a
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Deffered tax is a tax calculated on timing difference. Deffered tax can be in the nature of Assest and Liability.
Whenever any enity has any un absorbed depreciation or carry forward of losses then deffered tax asset should be created only if their is virtual certainity supported by convincing evidence that their should be sufficient taxable income against which such Deffered tax asset can be realised.
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