Deferred tax: The difference between the actual taxable liability and the books of records maintained by the individual, firm or an entity is termed as deferred tax. The difference is created because of the tenure of transactions or the actual performance of transactions, flow of funds into the business or changes in the value of the asset or liability due to business situations. These differences are adjustable in future when the appropriate time for the transaction arises. GAAP – Deferred taxes : Under GAAP, the deferred taxes are categorized as current components that occur during the year and the non-current component that fetches benefits or adjustments in the future. The nature of the asset and liability is ignored and only the time of occurrence of the transaction is considered to compute the deferred tax. To determine from the given statements which statement is false and to understand why it is a false statement.

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Chapter 19, Problem 1IST

To determine

Deferred tax: The difference between the actual taxable liability and the books of records maintained by the individual, firm or an entity is termed as deferred tax. The difference is created because of the tenure of transactions or the actual performance of transactions, flow of funds into the business or changes in the value of the asset or liability due to business situations. These differences are adjustable in future when the appropriate time for the transaction arises.

GAAP – Deferred taxes: Under GAAP, the deferred taxes are categorized as current components that occur during the year and the non-current component that fetches benefits or adjustments in the future. The nature of the asset and liability is ignored and only the time of occurrence of the transaction is considered to compute the deferred tax.

To determine from the given statements which statement is false and to understand why it is a false statement.

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