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Why is the tax expense reported on the income statement comprised of current and deferred tax?
Wiki User
∙ 14y ago
This is in accordance with Generally Accepted Accounting Principles, SFAS No. 109, "Accounting for Income Taxes".
The theory is that even if you don't owe tax today on a given temporary difference, you will one day owe (or get the tax benefit) of said temporary difference.
Remember: current tax expense= your tax bill this year
deferred tax expense/ benefit=your future tax expense or benefit on the book/tax temporary items
Wiki User
∙ 14y ago
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Do Prior period adjustments to income are reported in the current year's income statement?
false
Is Deferred income a current liability?
no
Are deferred tax assets current assets?
no
Deferred revenue expenditure?
Deferred expenditure refers to expenses incurred which do not apply to the current accounting period. Instead, they are debited to a 'Deferred expenditure' account in the non-current assets area of your chart of accounts. When they become current, they can then be transferred to the profit and loss account as normal.
Do you include Deferred income taxes current for calculating current assets in working capital calculation?
No you dont. Think about it, part of the equation for free cash flow is defined as subtracting out changes in working capital, capex, and changes in deferred taxes. changes in deferred taxes should be used in calculating cash taxes, not changes in working capital
Do Prior period adjustments to income are reported in the current year's income statement?
false
Is Deferred income a current liability?
no
Are deferred tax assets current assets?
no
Deferred revenue expenditure?
Deferred expenditure refers to expenses incurred which do not apply to the current accounting period. Instead, they are debited to a 'Deferred expenditure' account in the non-current assets area of your chart of accounts. When they become current, they can then be transferred to the profit and loss account as normal.
Is deferred revenue a current liability?
Yes, deferred revenue is a current liability. It means that the revenue has yet to be earned, therefore it is still owed to the business or company.
What is the difference between Income Tax and Provision of Income Tax?
Provision for income tax refers to the line item in the profit and loss statement. Income tax is a broad term and could mean current taxes (taxes actually payable to Government), Tax expenses/provision for tax- taxes reported in the P&L or deferred taxes (difference between current taxes and tax expense).
Is deferred income tax current asset?
yes
How is deferred tax liability different from current tax liability?
Current Tax Liability is that tax amount which is actaully payable in current year.Deffered Tax liability is that amount of tax liability which is created due to difference in net income in income statement and income according to tax authorities.
Do you include Deferred income taxes current for calculating current assets in working capital calculation?
No you dont. Think about it, part of the equation for free cash flow is defined as subtracting out changes in working capital, capex, and changes in deferred taxes. changes in deferred taxes should be used in calculating cash taxes, not changes in working capital
Is a three year notes payable classified as a current liability?
Only the portion of it that is due within the next 12 months is current. The balance is a deferred or non-current liability.
What is the CASA statement?
CASA statement means 'Current Account, Saving Account Statement'.
Nonqualified Deferred Compensation Plans - do distributions from a non qualified deferred comp plan have to be reported and if so do I use form 1099 Misc?
Generally a non Q plan means the recepient pays tax on the $ as they are deferred and as they grow...hence the withdrawals aren't taxable (because they were already taxed as payroll). If this plan had some deferreal of current income (either the contribution or the growth of the corpus), then some type of 1099, or likely even inclusion in W-2, on withdrawal wopuld be needed. The employer provides W-2/1099...not the recepient.
