Deferred Tax Deferred tax account shows the amount of reconciliation, which occurs due to the difference between the income tax expense account and the income tax payable account. Deferred tax asset When the Income Tax Expense account i.e. the estimated income tax amount is more than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be debited to Deferred Tax Asset account. Deferred tax liability When the Income Tax Expense account i.e. the estimated income tax amount is less than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be credited to Deferred Tax Liability account. To prepare: The summary journal entry to record income tax expense of K Co.
Deferred Tax Deferred tax account shows the amount of reconciliation, which occurs due to the difference between the income tax expense account and the income tax payable account. Deferred tax asset When the Income Tax Expense account i.e. the estimated income tax amount is more than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be debited to Deferred Tax Asset account. Deferred tax liability When the Income Tax Expense account i.e. the estimated income tax amount is less than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be credited to Deferred Tax Liability account. To prepare: The summary journal entry to record income tax expense of K Co.
Solution Summary: The author explains how K Co.'s income statement shows 1,045 million income tax expense for the year 2016.
Definition Definition Items on the balance sheet that are created when the tax paid is less than the tax considered on the income statement. A deferred tax liability is recorded on the liability side of the balance sheet and is thus a tax burden. It increases the taxes owed in the future.
Chapter 16, Problem 16.8BYP
1.
To determine
Deferred Tax
Deferred tax account shows the amount of reconciliation, which occurs due to the difference between the income tax expense account and the income tax payable account.
Deferred tax asset
When the Income Tax Expense account i.e. the estimated income tax amount is more than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be debited to Deferred Tax Asset account.
Deferred tax liability
When the Income Tax Expense account i.e. the estimated income tax amount is less than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be credited to Deferred Tax Liability account.
To prepare: The summary journal entry to record income tax expense of K Co.
2.
To determine
The current and noncurrent net deferred tax asset or liability of K co. in 2015 and 2016.