Under which condition can deferred tax assets arise?

Deferred tax assets arise primarily from deductible temporary differences. This occurs when the carrying amount of an asset or liability in the financial statements is less than its tax base, allowing for future tax deductions that reduce taxable income. In essence, these differences create tax benefits that can be utilized in future periods when the company is liable to pay taxes.

For example, if a company recognizes an expense in its financial statements but is allowed to deduct that expense for tax purposes in a later period, a deductible temporary difference is created. This results in the company having potential future tax benefits, hence leading to the recognition of a deferred tax asset.

The other conditions stated do not result in the recognition of deferred tax assets. Taxable temporary differences, for instance, would lead to the creation of deferred tax liabilities instead. Deferred tax payments themselves do not directly contribute to the recognition of deferred tax assets, and settling deferred tax liabilities relates to past transactions and obligations rather than the creation of new tax assets.