A company has a significant amount of deferred tax assets on its balance sheet. Discuss the accounting treatment for deferred tax assets and the potential impact of changes in tax laws on the company's financial statements. Answer

A company has a significant amount of deferred tax assets on its balance sheet. Discuss the accounting treatment for deferred tax assets and the potential impact of changes in tax laws on the company's financial statements. Answer

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter12: Liabilities: Off-balance-sheet Financing, Retirement Benefits, And Income Taxes

Section: Chapter Questions

Problem 17Q

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Question

Definition Definition Estimated future tax made while preparing accounts. Deferred tax is estimated based on past and present transactions from financial statements. It is not the actual tax that needs to be paid or is refundable from the revenue authority; it is an accounting entry. It is necessary to account for deferred tax due to difference between accounting profits and taxable profits.

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