If it is unlikely to obtain sufficient taxable income to offset against the benefit of the deferred income tax asset, the carrying amount of the deferred income tax assets shall be written down.

The deductible losses, which can be utilised against the future taxable profit in accordance with tax law, are regarded as temporary differences and a deferred tax asset is recognised accordingly.

The new standards eliminated the payable tax method and tax-effect-accounting method (deferral method and income statement liability method), and required adopting balance sheet liability method.