What is a deferred tax asset?
A deferred tax asset is an asset on a company’s balance sheet that can be used to reduce taxable income. This will exist if future tax accounting income is greater than the future financial accounting income.
Another way of expressing deferred tax assets can be – if your taxable income (tax return income) is greater today (aka you are paying more tax today) than what would be recognized on your income statement. You will be able to recognize these expenses on the income statement in the future. This would result in a deferred tax asset because you have a future tax savings.
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What is a deferred tax liability?
A deferred tax liability is a tax that is assessed or is due for the current period but has not yet been paid. This will exist if future tax accounting income is less than future financial accounting income. Another way of expressing deferred tax liabilities can be “if your taxable income (tax return income) is...
What is a deferred tax liability?
A deferred tax liability is a tax that is assessed or is due for the current period but has not yet been paid. This will exist if future tax accounting income is less than future financial accounting income. Another way of expressing deferred tax liabilities can be “if your taxable income (tax return income) is...
