Share this content

Technical question

Technical question

If depreciation charges are higher than capital allowances is that an originating timing difference or is it the other way around?
Edward Fraser


Please login or register to join the discussion.

By gbms
24th Oct 1999 00:08

Timing differences
The usual situation is where capital allowances exceed the depreciation in the accounts, particularly where new fixed assets are being purchased. Such expenditure creates originating timing differences for deferred tax purposes until such time as the depreciation catches up with the capital allowances and the timing differences start to reverse, and are eventually wiped out. Where depreciation exceeds capital allowances on new capital expenditure, this is the flip side of the usual originating timing difference mentioned above, though it is still an originating timing difference, and one which over time should completely reverse.

Thanks (0)
Share this content