Welcome Back to our blog today we are going to explain what is deferred tax asset, how to make a deferred tax asset journal entry. if you are an accounting student then you should this article till the end because deferred tax asset journal entries hold significant importance in the accounting field.

Deferred Tax Assets: An Overview

Before we start our journal entry let me give you an overview of  Deferred Tax Assets:

Deferred tax assets are a very efficient financial tool that helps reflect potential future tax benefits for a company. So from a company perspective, this is a very important concept that every accountant should know.

deferred tax asset journal entry

Our first step is to Recognition of Deferred Tax Assets:

  • Identification of future tax benefits from differing taxable and financial incomes.
  • Recognition based on probable future profitability.
  • Assessment of the likelihood of realizing these assets.
  • Linking to deductible temporary differences.

Deferred Tax Calculator

 Multiply the temporary difference by the tax rate. If it's a deferred tax asset, it's a credit; if it's a deferred tax liability, it's a debit.

For Example, if a temporary difference is 10,000 and the tax rate is 20%, the deferred tax asset or liability would be 2,000 (10,000 * 20%).

Deferred Tax Asset Journal Entry Example

AccountDebit (Increase)Credit (Decrease)
Deferred Tax Asset₹10,000
Income Tax Expense₹10,000

This is given a journal entry where 10,000 rupees is debited to the Deferred Tax Asset account to represent increased anticipated tax benefits, while the Income Tax Expense account is credited with the same amount to acknowledge the recognition of the deferred tax asset.

Deferred Tax Asset Journal Entry In Tally

  • Step 1: Open Tally and Go to Gateway of Tally

  • Step 2: - Select the 'Accounting Vouchers' option from the main menu.

  • Step 3: - Now Create a new voucher by selecting 'F7: Journal' or use the shortcut key 'F7.'

  • Step 4:-  Enter the date for the transaction.

  • Step 5: - In the first line, select the account for the deferred tax asset.

  • Step 5:-  Enter the amount under the 'Debit' column as we discuss in our journal entry.

  • Step 6:-  Move to the second line and choose the 'Income Tax Expense' account.

  • Step 7: - Enter the same amount in the 'Credit' column for the income tax expense account.

  • Step 8:-  At the end save the voucher using 'Ctrl + A' .


Here in this post, we add all related information about deferred tax assets and a journal entry example so if you are an accounting student then you should read this post till the end.