Accounting Mystery Tip

Let us assume you have accounting income of 100. And your depreciation in taxes is in excess or above that of accounting by 20. And you have other bad debt for accounting purposes that is in excess or above the ones in taxes by 4. And the rate is 50%.

​So, what you will need to do is Dr. DTA because of bad debt by 2 (50% of 4), Dr. 50 of income tax expense (50% of 100), and then you will Cr. your DTL because of depreciation by 10 (50% of the 20), Cr. tax payable by 42 (100-20+4).