Deferred tax double entries

If you question correct, it is deferred tax assets not liabilities.

Accounts depreciation is 20% pa. Tax depreciation is 15% pa. Therefore, the carrying amount of the asset is lower than the tax base. The temporary difference is deductible temporary difference and deferred tax assets arise. If it is probable the deferred tax assets can be utilize, according the HKAS, the deferred tax assets can be recognized. Otherwise, the assets cannot be recognized.

If recognized, the double entry is
Dr Deferred tax asset Cr P&L - Income tax

At the end of the 4th year, the asset sold. Therefore, the profit on assets is transferred to P&L. In addition, the taxable profits will be adjusted in tax computation. Therefore, the carrying amount of the asset is 0 as well as the tax base and deferred tax balance is also 0.

As deferred tax is calculated at balance sheet approach, the previous debit balance of deferred tax account will transfer to P&L and double entry is

Dr P&L - Income tax Cr Deferred tax asset