Please help me to understand this part from CFA web lesson
"The tax base of a liability is the carrying amount of the liability less any amounts that will be deductible for tax purposes in the future. With respect to payments from customers received in advance of providing the goods and services, the tax base of such a liability is the carrying amount less any amount of the revenue that will not be taxable in future. "
There is an example which pertains to this lesson
Eg: 1. Donations: Entiguan Sports made donations of €100,000 in the current fiscal year. The donations were expensed for financial reporting purposes, but are not tax deductible based on applicable tax legislation.
Carrying Amount (€) Tax Base (€) Temporary Difference (€)
- Donations 0 0 0
Donations : The amount of €100,000 was immediately expensed on Entiguan’s income statement; therefore, the carrying amount is €0. Tax legislation does not allow donations to be deducted for tax purposes, so the tax base of the donations equals the carrying amount.
** My idea: I thought donation on Balance sheet is 100,000???
What did i miss here?
Likewise, we have equation: DTL= (Carrying val- Tax base)*tax