Virtual certainty determination is a matter of judgement to be evaluated on a case to case basis , should be supported by convincing evidence, i.e., evidence available at reporting date in concrete form and cannot be based merely on forecasts of performance
Reasonable certainty would normally be achieved by examining past records of the enterprise; or by making realistic estimates of profits for the future.
Virtual certainty is a matter of judgment of convincing evidence, which should be available in a concrete form at a particular date.
The reasonable certainty can be determined by making the realistic estimates of future profits based on the examination of profits and loss statement of earlier periods.
When there is a difference between taxable income and accounting income resulting in deferred tax asset, then it should be recognized only when there is a reasonable certainty of its realization. The recognition of deferred tax asset should be to the extent of the reasonable certainty of the expected realization
and when an entity has unabsorbed depreciation or carry forward of losses. In such a case, deferred tax asset should be recognized to the extent there is a virtual certainty supported by convincing evidence.
