Unformatted text preview: implies that these costs are more persistent in nature. 4 Negative expense typically implies that an accrual in one or more previous year(s) is overstated and the company is reversing the overstatement in the current year. As a result, the previous year’s expense was overstated, thus underestimating profit for that year. Deferred tax liabilities increase when taxable income is less than financial reporting income (that which is reported to shareholders). The most common reason this occurs is because companies use an accelerated depreciation method for tax purposes that results in a lower taxable income in the earlier years of the asset’s life vis-à-vis net income on the financial accounting books (that reflect straight-line depreciation for GAAP purposes) ....
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- Spring '11
- Generally Accepted Accounting Principles, Restructuring costs