Tax Base and carrying amount HELP!!!

[JCM]

I know this may be a stupid question, but can somebody help me understand the nest statement…
Taxable temporary differences or deferred tax liabilities arise when the carrying amount of an asset is greater than its tax base, or when the carrying amount of a liability is less than its tax base.
I suppose the first part means that because of depreciation methods the carryng amount of an asset is going to be greater than its tax base thats why it creates a DTL<— is that right??
with respect to DTAs if the carryng amount of a libility is less that means that is has already being deducted from the NI of the FS but not from the tax report, thats why it creates a DTA ??????
is that what the above statement means??
Thank You for the help.

 

[ravinsu]

you are correct.
If more depreciation is recorded in the tax returns, it creates a DTL and the balance sheet for the tax returns shows the carrying value of the asset less than the balance sheet presented to the shareholders.
If there are liabilities [like warranty expenses] that are not eligible for deductions until actaully incurred, they will be deducted in the income statements presented to the shareholders, but not to IRS. It creates a DTA since more tax is paid than is shown in the financials. The tax base of liabilities will be less than carrying value.

 

[JCM]

Thanks a lot, that makes sense