How are deferred tax assets and deferred tax liabilities derived?

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Basically, the book tax provision has 2 part - current (what you will pay this year) and deferred (what you will pay in some other period. It is determined using the financial book income. (Yes, there are some things, called "permanent" differences which are past this discussion).

Tax accounting uses different conventions and requirements to determine what "income" is TAXABLE income. So for example, while financial accounting may require a company record an expense for bad debts - using some basis, (perhaps it's past history that some percent of sales are never collected) and that reduces book income that year - tax has a different set of requirements - which says that the expense CANNOT be recoded until it is absolutely realized (an "all events" test, not just an estimate) has been met.

So while over the years, the amount of bad debt (reducing income) may be very, very similar - when it happens is different. So, while the book provision, using book income, records a total tax expense that year which incorporates the booked estimate of bad debt, since tax will not report that expense until a later period and will pay the tax on that income until the tax expense is recorded, the total provision (current + deferred) carries that until tax "catches up" to books (in this case.)

These differences can go either way, and therefore produce a deferred tax asset (something you paid tax on - recognized as income for tax before book, or a deferred tax liability (where say books allowed an expense before tax (as in the above)).

The net position (having a deferred asset or liability) is what is commonly shown on financial statements, although depending on the level of presentation, there may be one line for each - with detail of at least the major items causing the differences, someplace else in the statements.
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What is deferred tax?

Answer . Deffered Tax is the amount the payment of which you delayed to pay in future. There are many reasons for deffered taxation. There are so many expanses and incomes

What is meant by 'deferred tax liabilities'?

Essentially, they are taxes that are 'deferred' to a later time. Tax Liabilities are typically taxes you are required to pay on income, or profit, you have obtained. Being a

Deferred tax assets?

Deferred tax assets is a companies asset that may reduce theirincome tax expenses. These can arise from net loss carryovers andcan be applied to future fiscal periods.

When do you debit the deferred tax asset?

When there is a difference between the carrying amounts and tax bases of: 1. Assets 2. Liabilities 3. Expenses which leads to a reduction in your future tax liability.

Can deferred tax asset offset against deferred tax liability?

Yes, but only if the entity has the legal right to settle on a net basis and they are levied by the same taxing authority on the same entity or different entities that intend

What are deferred taxes?

DEFERRED taxes MEAN not paying certain types of taxes currently. The payment of taxes on certain income or different asset at some period of time in the future. The buying a
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Where can one find deferred tax assets?

Deferred tax assets are when its determined that the company will have positive accounting income during the fiscal period. After that, the deferred tax assets can be applied.