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.

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter14: Taxes On The Financial Statements

Section: Chapter Questions

Problem 49P

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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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