Answered: Deferred tax liabilities should be…

Deferred tax liabilities should be treated as equity when:A . they are not expected to reverse.B . the timing of tax payments is uncertain.C . the amount of tax payments is uncertain.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 19DQ

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Question

Deferred tax liabilities should be treated as equity when:
A . they are not expected to reverse.
B . the timing of tax payments is uncertain.
C . the amount of tax payments is uncertain.

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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