标题: DTL as Liability or Equity [打印本页] 作者: sabina 时间: 2011-7-13 16:28 标题: DTL as Liability or Equity
Hi Guys,
Pls help me with this confusion
If company has DTL (Deferred Tax Liability),
1) if company has been making good profits,what does it mean? Does it imply that company will have $$ to pay off DTL and hence DTL can be reversed and should be treated as Debt?
2) What if company runs in losses, what does it mean from DTL Perspective? Does it mean company will not have $$ to pay debt and hence DTL will never be paid and increase the equity?
If a company has DTA (Deferred Tax Asset),and if company has been incurring losses,DTA is reduced by Valuation Allowance because Company might never take advantage of Asset.
However,if company starts making profit,DTA can be moved up.
3) Is this revaluation of DTA allowed under US GAAP?
Will appreciate prompt responses.
All the best
Cheers,作者: JPSem 时间: 2011-7-13 16:28
dontknow1987 Wrote:
-------------------------------------------------------
> Hi Guys,
> Pls help me with this confusion
>
> If company has DTL (Deferred Tax Liability),
> 1) if company has been making good profits,what
> does it mean? Does it imply that company will have
> $$ to pay off DTL and hence DTL can be reversed
> and should be treated as Debt?
>
> 2) What if company runs in losses, what does it
> mean from DTL Perspective? Does it mean company
> will not have $$ to pay debt and hence DTL will
> never be paid and increase the equity?
>
>
> If a company has DTA (Deferred Tax Asset),and if
> company has been incurring losses,DTA is reduced
> by Valuation Allowance because Company might never
> take advantage of Asset.
> However,if company starts making profit,DTA can be
> moved up.
>
> 3) Is this revaluation of DTA allowed under US
> GAAP?
>
>
> Will appreciate prompt responses.
>
>
> All the best
> Cheers,
Regarding the last point DTA, yes. If the company start making profit, it will reduce the valuation allowance. This is only in us gaap as under ifrs, DTA are booked only when it's probable that the company will use them, while us gaap just ask you to book dta as they incurr.
Regarding DTL, if the company is making losses, that means it won't be able to pay the DTL, so the DTL is reversed through equity
