Deferred Tax Explained 

hey why did he increased the differed tax liability to .5m?

@@anandudinesh9640 The deferred tax liability was increased by 0.5m, not 5m. The asset was revalued to 5m, whilst the tax base remained the same at 2m. That created a temporary taxable difference of 3m. Multiplying this 3m by the tax rate (20%) gives you deferred tax liability of 0.6m. But since the tax liability account already carries 0.1m, all you need to do is add 0.5m to the tax liability account to get to the total tax liability of 0.6m. I hope I was able to help?

@@anthonyparry2852 why we are increasing the liability to 0.5 instead off adding the 0.1 existing liability with the deferred tax liability of 0.6 m... please explain :)

@@anandudinesh9640 Deferred tax liability due to revaluation = 3M x 20% Tax rate = 0.6M. In Deferred tax liability account we have already recognised DTL of 0.1M, so to make it to 0.6M you need to credit 0.5M only. So now DTL is at 0.6M.

Remember we are recognising the movement in DTL. Before revaluation it was only 0.1M now after revaluation it the DTL is at 0.6M.

Hi there, DTA is deferred tax asset, and DTL is deferred tax liability!

I want to know about DTL and when it clear from this account(DTL)?

Hi there, DTA is deferred tax asset, and DTL is deferred tax liability!