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CMA Intermediate · Financial Accounting · Accounting for Taxes on Income (AS 22)

Which disclosure does AS 22 specifically require when an enterprise has unabsorbed depreciation or carry forward of losses under tax laws and has recognised a deferred tax asset?

When an enterprise has unabsorbed depreciation or carry forward of losses under tax laws, AS 22 requires disclosure of the nature of the evidence supporting recognition of the deferred tax asset. It does not require naming consultants, interest rates or long-term income forecasts.

  1. AThe nature of the evidence supporting the recognition of the deferred tax assetCorrect
  2. BThe name of the tax consultant who computed the carry forward
  3. CThe rate of interest on the unabsorbed amount
  4. DThe year-wise forecast of taxable income for the next ten years

Explanation

AS 22 requires disclosure of the nature of the evidence supporting recognition of deferred tax assets where unabsorbed depreciation or carried forward losses exist. The other items are not required by the standard.

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