The Orsavel group had not recognised a deferred tax asset on its warranty provisions of 800,000, deductible when paid, for lack of probable taxable profit in its tax entity. The tax absorption of a profitable acquiree within the same taxable entity makes such profit probable at the acquisition date. Tax rate: 20%. Record the entry at Orsavel.
- Orsavel's warranty provisions
- 800,000
- Tax rate (%)
- 20 %