Cinnamon, Inc. recorded a total deferred tax asset in 2007 of $12,301, off set by a $12,301valuation allowance. Cinnamon most likely :A . fully utilized the deferred tax asset in 2007.B . has an equal amount of deferred tax assets and deferred tax liabilities.C . expects not to earn any taxable income before the deferred tax asset expires.

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Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.