The FASB has carefully avoided the issue of discounting deferred taxes. SFAS No.109, “Accounting for Income Taxes,” stated, a deferred tax liability or asset should be recognized for the deferred tax consequences of temporary differences and operating loss or tax credit carryforwards…. Under the requirements of this Statement: … Deferred tax liabilities and assets are not discounted. a) Present arguments supporting the discounting of deferred taxes b) Present arguments opposing the discounting of deferred taxes

The FASB has carefully avoided the issue of discounting deferred taxes. SFAS No.109, “Accounting for Income Taxes,” stated, a deferred tax liability or asset should be recognized for the deferred tax consequences of temporary differences and operating loss or tax credit carryforwards…. Under the requirements of this Statement: … Deferred tax liabilities and assets are not discounted. a) Present arguments supporting the discounting of deferred taxes b) Present arguments opposing the discounting of deferred taxes

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 14GI

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Question

The FASB has carefully avoided the issue of discounting deferred taxes. SFAS No.109,
“Accounting for Income Taxes,” stated, a deferred tax liability or asset should be recognized
for the deferred tax consequences of temporary differences and operating loss or tax credit
carryforwards…. Under the requirements of this Statement: … Deferred tax liabilities and
assets are not discounted.

a) Present arguments supporting the discounting of deferred taxes
b) Present arguments opposing the discounting of deferred taxes.

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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Step 2: a) Present arguments supporting the discounting of deferred taxes:

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Step 3: b) Present arguments opposing the discounting of deferred taxes:

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