02-07-2009, 12:14 AM
Dear,
Accounting profit and tax profit are two different things and are determined following different basis. This is the major reason which creates differences between tax and accounting base of related assets and liabilities causing deferred tax consequences. I just wrote it to clarify a basic misconception.
Now, in determining accounting profit and drafting the income statement, one has to follow the financial reporting framework applicable to his entity. The initial depreciation is a concept within the meaning of Income Tax Ordinance, 2001 and has nothing to do with the financial reporting framework.
Therefore, while determining accounting profit depreciation would be charged based upon useful life of the related asset.
In your query, you have not mentioned the description of the asset, its useful life and period for which such asset was put to use during the year. How can I tell you the depreciation charge. Please revist your question.
I don't know why you feel the replies given on this forum, specially the professional ones, are biased.
Regards,
KAMRAN.
